Executive Summary: Priced Out
The housing market downturn did not solve the housing affordability crisis that has been building in the Boston region for the past 20 years.
Housing in the Boston metropolitan area1 remains unaffordable to the vast majority of workforce households—those earning 60 to 100 percent of area median income (AMI)—despite the recent economic and housing market downturn.
There remains an extreme shortage—about 25,000 units—of both rental and owner-occupied housing accessible to the region’s major employment cores within and around the Route 128 corridor.
While home prices and rents have declined during the downturn, the Boston area still ranks among the least affordable metropolitan areas in the United States—along with others such as New York City, Los Angeles, Washington, D.C., and San Francisco.
The high cost of housing is particularly challenging for workforce households seeking to own a home in the Boston area anywhere close to their place of work. In a pattern repeated in many U.S. metropolitan regions, much of the housing in the closer-in portion of the Boston area has become too expensive
for workforce households while that on the periphery, far from most jobs, remains the only affordable option.
Some rental housing stock affordable to workforce households exists near major employment cores; however, the quality of this housing is inadequate. The amount of workforce rental housing in the Boston metropolitan area rated moderately or severely inadequate by the American Housing Survey is from two to four times higher than that for peer markets, and workforce rental housing is much more likely to be inadequate than are more expensive housing units.
It is unlikely that the Boston area will build its way out of this housing affordability crisis. Workforce renter households, particularly those with three or more persons, are largely priced out of the market for new-construction rental apartments. The high cost of land, entitlement, and construction makes developing new rental housing for these households challenging, if not impossible, without creative public financing solutions and other subsidy mechanisms.
The shortage of high-quality housing affordable to workforce households, both for sale and for rent, will only be exacerbated. Between now and 2020, the Boston metropolitan area market will face an additional shortage of nearly 11,000 units, leaving many of the region’s teachers, firefighters, nurses, and other workers vital to the area’s economy priced out of the market.
