Commonwealth Housing Task Force Quarterly Report June 30, 2012 Page 1
Total Page:16
File Type:pdf, Size:1020Kb
Commonwealth Housing Task Force Quarterly Report June 30, 2012 Page 1 Commonwealth Housing Task Force Quarterly Summary of Progress as of June 30, 2012 Note: in order to reduce the size of these reports, we have condensed the description of regular ongoing activities, and have moved much of the Chapter 40R update to Appendix I of this report. For background, please visit www.tbf.org/chtf and click on “Quarterly Updates”. A key to the Appendices and the Appendices themselves follow at the end of this quarter’s report. During the very active second Quarter of 2012, the Commonwealth Housing Task Force focused its efforts on: 1. The implementation and monitoring of Chapter 40R, including advocacy for pending legislation and funding. 2. The call for an increase in state funding for affordability, and monitoring of both state and federal legislation and programmatic developments. 3. Strategic planning for new initiatives of the Task Force, including assuring that the benefits of new construction under 40R and other state programs are available to the widest range of households, work with the committee to focus on public housing, and work with ULI to strengthen the State Historic Tax Credit program. 4. An expansion in participation in the Task Force itself, with a focus on diversity. 5. Seeking further financial support for the work of CHTF. Barry Bluestone, Eleanor White, and Ted Carman, working through the Dukakis Center for Urban and Regional Policy at Northeastern University, have carried out the staff work in coordination with active subcommittees and Boston Foundation staff. Commonwealth Housing Task Force Plenary Session and Housing Market Updates The Commonwealth Housing Task Force had a very successful and well-attended Plenary Session on April 18, 2012, featuring keynote speaker Aaron Gornstein, Undersecretary of the Massachusetts Department of Housing and Community Development (DHCD), and updates from the CHTF committee chairs. (Updates from the Committees are included in this Report under each Committee report.) Undersecretary Gornstein outlined the issues that will form his focus in the coming months: 1. Homelessness, especially incorporating the Housing First approach in which DHCD will concentrate on finding permanent housing placements with required services for homeless households. The goal is to have zero households living in hotels and motels. 2. Public Housing, including increasing the efficiency of the local housing authority delivery system. 3. The Production of Affordable Housing, including a potential increase in the bond cap allocation for housing programs and seeking a permanent funding source for the Chapter 40R program. 4. Foreclosure Issues, and 5. Planning for Growth in Gateway cities, for working families of all incomes, and with a focus on compact centers and smart growth. Undersecretary Gornstein also referenced several areas in which he will be looking to make changes in Chapter 40R Regulations and Guidance that will clarify operating rules to make the program more flexible at the local level. Additional detail about his presentation can be found in the Banker & Tradesman article of April 19, 2012, included in Appendix II of this Report. Undersecretary Gornstein’s comments were well-received by CHTF members in attendance, and CHTF looks forward to working with Aaron Gornstein in the months and years to come. Also as a major feature of the April 18 CHTF Plenary Session, Barry Bluestone discussed a PowerPoint presentation on the current state of the Massachusetts economy and the most recent data on housing prices, rents, and housing production. The key findings in Bluestone’s report were: Commonwealth Housing Task Force Quarterly Report June 30, 2012 Page 2 Gross state product (GSP) in Massachusetts is projected to grow at an accelerated rate through the first half of 2012. From a low of just 0.4% in the first quarter of 2011, state GSP increased in every quarter of calendar 2011, completing the fourth quarter at 2.8%. The first quarter of 2012 is expected to come in at a healthy 4.0% and rise to 4.9% in the second quarter. This is the type of strong growth we have not seen since the end of 2009 and the first quarter of 2010. Non-farm employment continued to grow from its annual low of 3,171,000 in 2009 to 3,232,000 in 2011. This represents a gain of 61,000 jobs with more jobs created in the first quarter of 2012. While the sale of single family homes in Massachusetts continued to decline from its recent peak in April 2010 to its recent low in July 2011, sales have been rising ever since, with sales in February 2012 increasing 15 percent over February 2011. This surge in sales should continue through the spring and summer of this year. Despite the rise in home sales, the price of single family homes in Greater Boston hit a recent peak in April 2010 (according to the Case-Shiller Price Index) and has continued to fall through January of this year. Hence the recovery in home prices between April 2009 and April 2010 could not be sustained. However, there is reason to believe that home prices in the region have now stabilized in 2012. Given the weak housing market in 2011, housing production in Greater Boston was lower in 2011 than at any time since at least 1990. This could lead to accelerated home prices and rents when the housing market picks up in 2012. Housing production data suggest that there has been a return of construction to the City of Boston since the early 1990s. Between 1991 and 1995, only about 3 percent of all housing permits pulled in Greater Boston were in the City itself. By 2006-2010, the percentage was four times greater – 12.5 percent. With the continuation of foreclosures, young households sitting on the homebuying sidelines, a continued increase in the number of university graduate students living in neighborhood housing, and almost no additional housing production beginning in 2009, Greater Boston rental vacancy rates continued to fall from 6.5% in the first quarter of 2010 to just 4.4% in the second quarter of 2011. The increase in demand with no concomitant increase in the supply of rental housing left asking and effective rents in Greater Boston at their highest level ever in 2011. Effective rents in Greater Boston increased by 3% in 2010 and an estimated 4% in 2011 – the largest annual increases since 2006. In the second quarter of 2011, Greater Boston had the 3rd highest effective rents among major metro areas in the country. As a result of rising rents, nearly half of all rental households in Greater Boston (47.5%) were paying more than 30 percent of their income in rent in 2010 (for a 2-bedroom apartment) while nearly a quarter (24.2%) were paying over 50 percent of their income. Other coverage this Quarter about news in the housing market continued to be mixed, but ended the month on an optimistic note. Included in Appendix II to this Report are articles from Banker and Tradesman of April 3, April 20, April 24, and May 22, 2012 reflecting an ever-improving mood about the economic situation in the Commonwealth. And on June 12, 2012, the MA Association of Realtors announced that pending single-family sales in May were over 5,000 in the state, representing a 32 percent increase over May of 2011. Echoing that positive outlook on the market, at least for the Boston area, is an article from the Boston Globe of June 14, 2012 (also included in Appendix II) covering the findings of the Joint Center for Housing Studies at Harvard. The full Joint Center Report (State of the Nation’s Housing 2012) can be accessed at http://www.jchs.harvard.edu/research/publications/state-nation%E2%80%99s- housing-. And we have also included in Appendix II excerpts from the MA Benchmarks Board at the Donahue Institute at UMass of June 15, 2012, concluding that although the world is currently a frightening place, the State is doing quite well. Although CHTF focuses primarily on housing issues in Massachusetts, we also keep an eye on market trends nationwide. In that connection, we have included in Appendix II a summary of an interesting assessment of the housing market nationally by the Demand Institute. Their full report, The Shifting Nature of U.S. Housing Demand, was released in June of 2012, and can be downloaded at www.demandinstitute.org . We have also included in Appendix II an Commonwealth Housing Task Force Quarterly Report June 30, 2012 Page 3 article from the Center for Housing Policy (April 5, 2012) concerning the increasingly timely issue of housing an aging population. Barry Bluestone, working with the Dukakis Center research team, began preparation for the 2012 Greater Boston Housing Report Card. In addition to the report’s regular update on housing production; home sales and prices; asking and effective rents; foreclosure activity; impact of Chapter 40B, 40R, and 40S; and government funding for housing programs, this year’s report will have a special chapter devoted to Greater Boston rents compared with rents in nineteen other major metro areas. Rental affordability will be estimated for existing households in Greater Boston as well as new arrivals. Work on this report will continue on a full-time basis through September. Student Housing Effort Barry Bluestone continues to pursue efforts to deal with the issues in the housing market presented by Boston’s being such a center of higher education. We house more than 100,000 full-time 4-year college students on campus in the Boston area, but nearly 180,000 live off campus, putting huge pressure on an already-overheated rental housing market.