UNDERSTANDING BOSTON The Greater Boston Housing Report Card 2017 Ideas from the Urban Core Responsive Development as a Model for Regional Growth November 2017 The Boston Foundation, Greater Boston’s community foundation, brings people and resources together to solve Boston’s big problems. Established in 1915, it is one of the largest community foundations in the nation—with net assets of more than $1 billion. In 2017, the Foundation and its donors paid $137 million in grants to nonprofit organizations. The Foundation is a close partner in philanthropy with its donors, with more than 1,000 separate charitable funds established either for the general benefit of the community or for special purposes. It also serves as a major civic leader, think tank and advocacy organization, commissioning research into the most critical issues of our time and helping to shape public policy designed to advance opportunity for everyone in Greater Boston. The Philanthropic Initiative (TPI), a distinct operating unit of the Foundation, designs and implements customized philanthropic strategies for families, foundations and corporations around the globe. Northeastern University’s School of Public Policy and Urban Affairs drives interdisciplinary thinking and problem solving on issues of pressing concern to society at local, state, national, and international levels—from transportation, housing and community development to social and environmental justice, resilience and sustainability. By educating students in both theory and practice, the School prepares them to become effective contributors to social, economic, and environmental change, in careers spanning the public, private, and nonprofit sectors, as well as academic research. The School’s degree and certificate programs and its cutting-edge research centers are putting into place the intellectual and institutional infrastructure required to create lasting solutions for social, economic and environmental challenges, and to generate positive impact on people, be they in the classroom, city hall, boardroom, neighborhood or around the world. The Warren Group collects public record data on real estate sales and ownership throughout New England and offers a range of real estate products, information services, and printed publications, including the weekly newspapers Banker & Tradesman and The Commercial Record. The company also produces and organizes trade shows and events for a variety of industries, including bankers, mortgage brokers, credit unions and lawyers. Based in Boston, the company was established in 1872 and is now in its fourth generation of family ownership and management. UNDERSTANDING BOSTON is a series of forums, educational events and research sponsored by the Boston Foundation to provide information and insight into issues affecting Boston, its neighborhoods and the region. By working in collaboration with a wide range of partners, the Boston Foundation provides opportunities for people to come together to explore challenges facing our constantly changing community and to develop an informed civic agenda. Visit www. tbf.org to learn more about Understanding Boston and the Boston Foundation. Design: Canfield Design Cover Photo: zhaojiankang|iStock © 2017 by the Boston Foundation. All rights reserved. UNDERSTANDING BOSTON The Greater Boston Housing Report Card 2017 Ideas from the Urban Core Responsive Development as a Model for Regional Growth AUTHORS Barry Bluestone James Huessy WITH ASSISTANCE FROM Eleanor White, Ted Carman, William Reyelt, Tim Reardon, Clark Ziegler and Devin Quirk EDITOR Sandra Kendall, The Boston Foundation Prepared by The School of Public Policy and Urban Affairs Northeastern University for The Boston Foundation Contents Letter from Paul Grogan ........................................................................................ 5 Executive Summary ............................................................................................ 7 CHAPTER ONE Introduction .................................................................................. 13 CHAPTER TWO Home Sales, Housing Production and Foreclosures in Greater Boston .......................... 19 CHAPTER THREE Home Prices and Rents in Greater Boston ..................................................... 37 CHAPTER FOUR Public Policy and Public Spending on Housing in the Commonwealth ........................... 49 CHAPTER FIVE A 21st Century Approach to Meeting Greater Boston’s Housing Needs .......................... 57 CHAPTER SIX Summary and Conclusions .................................................................... 67 Endnotes ..................................................................................................... 75 Appendix .................................................................................................... 80 LIST OF FIGURES AND TABLES FIGURE 1.1 Growth in Real Output, Massachusetts vs. U.S., 2009–2017 Q2 ................................................ 13 FIGURE 1.2 Total Non-Farm Employment Seasonally Adjusted, Massachusetts, 2008–2017 (August) ............................ 14 FIGURE 1.3 Massachusetts Civilian Unemployment Rate, 2009–2017 (August) ............................................. 14 FIGURE 1.4 Real Average Weekly Wage—Private Industry, Massachusetts, 2001–2017 (Q1) ................................... 15 FIGURE 1.5 Five-County Greater Boston Total Non-Farm Employment, 2008–2017 (March) ................................... 15 TABLE 1.1 Population Statistics ................................................................................. 16 TABLE 1.2 Demographic Profile of the Five-County Greater Boston Region ............................................... 17 TABLE 1.3 Housing Cost Burden, Greater Boston ................................................................... 18 FIGURE 2.1 Annual Number of Sales of Single-Family Homes in Five-County Greater Boston Region, 2000 – 2017 (Est.) ............. 19 FIGURE 2.2 Annual Number of Sales of Condominiums in Five-County Greater Boston Region, 2000 – 2017 (Est.) .................. 20 FIGURE 2.3 Annual Number of Sales of Homes in Two-Unit and Three-Unit Structures in Five-County Greater Boston Region, 2000 – 2017 (Est.) .................................................................. 20 TABLE 2.1A Municipal Leaders in Single-Home Sales in Greater Boston, 2010–2017 (Est.) ..................................... 21 TABLE 2.1B Municipal Leaders in Sales of Condominiums in Greater Boston, 2010–2017 (Est.) ................................. 22 FIGURE 2.4 Homeownership Rate Boston Metro Area, 2005 – 2017 (Q1 & Q2) .............................................. 22 TABLE 2.2 Homeownership Rate for Prime Age Households in Greater Boston, 2000–2015 .................................. 23 The Greater Boston Housing Report Card 2017 | 1 FIGURE 2.5 Total Housing Permits Issued in Five-County Greater Boston Region, 2000–2017 (Est.) ............................. 24 FIGURE 2.6 Number of Housing Unit Permits in Five-County Greater Boston Region, by Structure Type, 2000–2017 (Est.) ........... 24 FIGURE 2.7 5+ Unit Housing Permits as a Percent of All Housing Permits in Greater Boston, 2000–2017 (Est.) .................... 24 TABLE 2.3 Single-Family and Multifamily Building Permits in Greater Boston, 2000–2017 (Est.). .25 TABLE 2.4A Municipalities Permitting the Most New Housing Units, 2011–2017 ............................................ 26 TABLE 2.4B Municipalities Permitting the Most New Single-Family Units, 2011–2017 ........................................ 27 TABLE 2.4C Municipalities Permitting the Most New Units in 5+ Structures, 2011–2017 ...................................... 27 TABLE 2.5 Housing Permits Issued: City of Boston vs. Greater Boston ................................................... 28 TABLE 2.6 Boston Share of Greater Boston Housing Permits, 2012–2016 ................................................. 28 FIGURE 2.8 New Completed Apartment Units, Boston Metro Area, 2000–2016 (Est.). .29 TABLE 2.7 Average Application to Permit Wait Time (in Days) by Housing Type, 2014–2016 (September) ....................... 29 FIGURE 2.9 City of Boston Units of New Housing, 2014–2017 (Q2) ...................................................... 30 TABLE 2.8 Students Living On-Campus vs. Off-Campus in Greater Boston, 2016 .......................................... 31 TABLE 2.9 Chapter 40R Statistics by Community ................................................................... 32 FIGURE 2.10 Annual Number of Foreclosure Petitions in Single-Family Homes in Five-County Greater Boston Region, 2000–2017 (Est.) .................................................................. 35 FIGURE 2.11 Annual Number of Foreclosure Deeds in Single-Family Homes in Five-County Greater Boston Region, 2000–2017 (Est.) .............................................................................. 35 TABLE 3.1 Factors Affecting Home Prices and Rents ................................................................. 37 FIGURE 3.1 Annual Percent Change in Case-Shiller Single-Family House Price Index, Greater Boston Metropolitan Area, 1987–2017 (Est.) ......................................................... 38 FIGURE 3.2 Homeowner Vacancy Rates, Greater Boston vs. U.S. Metro Areas, 1990–2017 (Through June) ........................ 38 FIGURE 3.3 Annual Median Price of Single-Family Homes in Five-County Greater Boston Region, 2000–2017 .................... 39 FIGURE 3.4 Annual Median Price of Condominiums in Five-County Greater Boston Region,