The Commonwealth: A Strong and Buoyant Economy Growth in Real - - PowerPoint PPT Presentation

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The Commonwealth: A Strong and Buoyant Economy

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Growth in Real Output Massachusetts vs. U.S. 2009 - 2017 Q1&Q2

Source: MassBenchmarks

The economy of Massachusetts continues to outpace the U.S.

• 0.2%

2.7% 1.7% 1.6% 3.1% 2.5% 2.0% 1.6% 1.9% 0.4% 3.0% 3.8% 1.7% 3.1% 3.1% 2.6% 2.4% 2.6%

• 0.5%

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 2009 2010 2011 2012 2013 2014 2015 2016 2017:I&II U.S. Massachusetts

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3,261,700 3,170,600 3,184,800 3,217,300 3,255,200 3,274,200 3,366,700 3,410,800 3,463,700 3,526,200 2,900,000 3,000,000 3,100,000 3,200,000 3,300,000 3,400,000 3,500,000 3,600,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 0.4% 1.0% 1.2% 0.6% 2.8% 1.6% 1.8%

• 2.8%
• 1.3%

1.3%

Total Non-Farm Employment Seasonally-Adjusted Massachusetts 2008-2017 (August)

(% = Annual Growth Rate)

355,600 Jobs added in the Commonwealth since 2009 … +11.2%

Source: Massachusetts Department of Labor and Workforce Development

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8.3% 8.3% 7.2% 6.7% 6.6% 5.7% 4.8% 3.7% 4.2% 3.5% 4.5% 5.5% 6.5% 7.5% 8.5% 9.5% 2009 2010 2011 2012 2013 2014 2015 2016 2017 (August)

Massachusetts Civilian Unemployment Rate 2009 - 2017 (August)

Source: Massachusetts Department of Labor and Workforce Development

Massachusetts is now at near “Full Employment” with an extremely tight labor market in most occupations

Northeastern School of Public Policy and Urban Affairs  https://www.northeastern.edu/cssh/policyschool Real Average Weekly Wage - Private Industry Massachusetts 2001-2017 Q1

Source: Massachusetts Department of Labor and Workforce Development

$1,307 $1,256 $1,230 $1,266 $1,306 $1,291 $1,341 $1,393 $1,355 $1,432 $1,100 $1,150 $1,200 $1,250 $1,300 $1,350 $1,400 $1,450 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

With a tight labor market, real average wages are finally on the rise … but still less than 10% higher than nearly a decade ago

Greater Boston at the Center of the Economic Boom

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Five-County Greater Boston Total Non-Farm Employment 2008-2017 (March)

Source: Massachusetts Department of Labor and Workforce Development

2,194,437 2,131,582 2,116,982 2,144,854 2,190,690 2,224,445 2,263,550 2,313,473 2,371,312 2,400,587 2,000,000 2,050,000 2,100,000 2,150,000 2,200,000 2,250,000 2,300,000 2,350,000 2,400,000 2,450,000 2008 (Mar) 2009 (Mar) 2010 (Mar) 2011 (Mar) 2012 (Mar) 2013 (Mar) 2014 (Mar) 2015 (Mar) 2016 (Mar) 2017 (Mar)

Since 2010, Greater Boston has experienced an increase of nearly 284,000 jobs – 83% of the Massachusetts total

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• A booming economy is extremely attractive to workers seeking excellent job opportunities
• As such, a booming economy retains workers who already live here and attracts many more
• But if the housing stock is limited and growing too slowly, housing demand outstrips

housing supply pushing up prices and rents … well above the increase in average income

• Those who cannot afford higher priced housing ultimately seek it elsewhere … often in

communities farther and farther away from the urban core

• This not only begins to push up prices in what were lower priced communities, but adds to

the transportation challenge in the region

• This is Greater Boston today!
• The only solution is to find a way for housing supply to complement housing

demand

The Challenge of a Strong Economy

Homes Sales Rising in Greater Boston – although stalled in 2017

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Annual Number of Sales of Single-Family Homes in Five- County Greater Boston Region, 2000-2017 (Est.)

Since 2011, annual home sales up by +33% but stalled in 2017 likely due to extremely limited supply for sale and high prices facing younger households who are delaying homeownership

33,310 31,000 31,935 32,485 35,444 33,317 27,927 25,886 22,787 23,482 23,534 22,635 27,372 29,792 28,884 32,064 34,183 30,170 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (Est.)

Source: The Warren Group

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Annual Number of Condominium Sales in Five-County Greater Boston Region, 2000-2017 (Est.)

Source: The Warren Group

17,798 16,844 18,108 19,093 23,194 26,127 22,335 20,615 16,027 14,980 14,471 12,269 15,437 16,752 16,875 17,698 18,910 18,134 5,000 10,000 15,000 20,000 25,000 30,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (Est.)

Northeastern School of Public Policy and Urban Affairs  https://www.northeastern.edu/cssh/policyschool Annual Number of Sales of Homes in Two-Unit and Three-Unit Structures in Five-County Greater Boston Region, 2000-2017 (Est.)

Source: The Warren Group

4,648 5,539 5,209 3,791 2,575 3,075 3,216 3,110 2,886 3,374 3,431 3,351 3,651 3,977 3,328 2,101 2,441 2,430 1,622 933 1,352 1,396 1,388 1,142 1,268 1,331 1,305 1,512 1,482 1,374 1,000 2,000 3,000 4,000 5,000 6,000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (Est.) Two-Unit Three-Unit

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Municipal Leaders in Single-Family Home Sales in Greater Boston, 2010 - 2017 (Est.)

2017 (Estimate) 2016 2015 2014 2013 2012 2011 Brockton 934 (1) 983 (1) 772 (1) 619 (3) 660 (2) 659 (2) 552 (2) Plymouth 784 (2) 845 (2) 713 (2) 624 (2) 617 (4) 582 (3) 512 (3) Lowell 608 (3) 597 (7) 490 (9) 473 (6) 425 (8) 419 (8) 411 (4) Framingham 600 (4) 603 (6) 657 (4) 604 (4) 627 (3) 498 (5) 408 (6) Lynn 592 (5) 681 (3) 602 (5) 473 (6) 418 (9) 394 (11) 356 (8) Newton 562 (6) 633 (5) 670 (3) 634 (1) 691 (1) 671 (1) 582 (1) Weymouth 510 (7) 647 (4) 579 (7) 461 (7) 500 (6) 450 (7) 340 (9) Quincy 500 (8) 553 (8) 592 (6) 547 (5) 576 (5) 507 (4) 394 (7) Methuen 430 (9) 505 (10) 506 (8) 388 (10) 352 (18) 370 (12) 304 (13) Wellesley 424 (10) 353 (24) 396 (15) 357 (15) 364 (14) 415 (9) 329 (10) Haverhill 424 (10) 536 (9) 470 (10) 352 (16) 357 (16) 346 (14) 325 (11) Source: The Warren Group

Single-Family Home Sales rising the fastest in outlying lower income housing markets

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Municipal Leaders in Condominium Sales in Greater Boston, 2010 - 2017 (Est.)

2017 (Estimate) 2016 2015 2014 2013 2012 2011

Boston

1,702 (1) 2,043 (1) 1,785 (1) 1,632 (1) 1,827 (1) 1,864 (1) 1,575 (1)

South Boston

764 (2) 743 (3) 709 (3) 708 (3) 721 (3) 692 (3) 527 (3)

Cambridge

716 (3) 777 (2) 710 (2) 751 (2) 937 (2) 918 (2) 790 (2)

Quincy

560 (4) 486 (6) 421 (6) 327 (9) 328 (10) 340 (8) 198 (13)

Brookline

528 (5) 527 (4) 557 (4) 483 (4) 540 (4) 635 (4) 476 (4)

Dorchester

470 (6) 449 (8) 415 (7) 447 (6) 374 (9) 352 (7) 340 (5)

Somerville

442 (7) 491 (5) 400 (8) 471 (5) 430 (5) 450 (5) 340 (5)

Jamaica Plain

416 (8) 431 (9) 453 (5) 401 (7) 411 (6) 368 (6) 302 (6)

Newton

396 (9) 340 (13) 348 (13) 341 (8) 378 (8) 322 (10) 254 (7)

Haverhill

392 (10) 358 (11) 349 (12) 304 (13) 216 (19) 207 (17) 145 (16)

Source: The Warren Group

Condo Sales strongest in the Urban Core

Homeownership

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Homeownership Rate Boston Metro Area (2005-2017, Q1 & Q2)

Source: U.S. Census Bureau

63.0% 64.7% 64.8% 66.3% 65.5% 66.1% 65.5% 66.0% 66.3% 62.9% 59.2% 58.9% 60.0% 54.0% 56.0% 58.0% 60.0% 62.0% 64.0% 66.0% 68.0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017: QI&II

Why?

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Age 25-34 Age 35-44 2000

40.7% 67.2%

2010

36.2% 65.0%

2015

30.0% 58.0%

Homeownership Rate for Prime Age Households 2000-2015

Source: U.S. Census Bureau

Homeownership Rates plummeting for Young Households

Home Prices

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Upward Pressure on Home Prices Downward Pressure on Home Prices Upward Pressure on Rents Downward Pressure

• n Rents

Strong Economy Strong Economy Rising Household Income Household Indebtedness Increased Income Inequality Population Growth Delayed Marriage/Childbearing Delayed Marriage/Childbearing Aging Population Limited Supply of New Homes Limited Supply of New Apartments Increased Supply of New Apartments Low Mortgage Rates

Source: Dukakis Center for Urban and Regional Policy

Factors Affecting Home Prices and Rents

Northeastern School of Public Policy and Urban Affairs  https://www.northeastern.edu/cssh/policyschool Homeowner Vacancy Rates Greater Boston vs. U.S. Metro Areas, 1990 – 2017 (Through June)

Source: U.S. Census Bureau

0.6 0.7 0.3 0.6 0.5 1.2 2.0 1.9 1.5 1.5 1.2 1.4 1.3 1.2 0.8 1.1 0.9 0.4 1.4 1.8 1.6 1.7 1.7 1.9 2.4 2.8 2.9 2.6 2.6 2.5 2.0 2.0 1.8 1.8 1.5 1.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (June) Boston Metro Area Inside Metropolitan Statistical Areas

In Greater Boston almost no available housing inventory – Vacancy Rate 1/5 of what is needed to stabilize prices

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Annual Percent Change in Case-Shiller Single-Family House Price Index Greater Boston Metropolitan Area, 1987-2017 (Est.)

28.4% 11.7% 3.0%

• 0.8%
• 5.7%
• 8.1%
• 0.3%

2.2% 4.0% 2.2% 4.0% 6.0% 9.5% 12.8% 14.3% 15.6% 11.5% 9.8% 9.… 7.1%

• 1.9%-4.0%
• 5.8%
• 4.8%

1.9%

• 2.0%

0.5% 7.2% 6.0% 4.3%4.7% 4.9%

• 12%
• 7%
• 2%

3% 8% 13% 18%

Home Prices continue to increase at close to 5% per year

Source: Standard & Poor

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Annual Median Price of Single-Family Homes in Five-County Greater Boston Region 2000-2017

Source: The Warren Group

$260,196 $284,713 $326,657 $353,178 $385,560 $405,059 $394,571 $397,928 $359,086 $339,123 $354,207 $345,037 $348,096 $380,931 $395,740 $409,400 $424,301 $447,799 $200,000 $250,000 $300,000 $350,000 $400,000 $450,000 $500,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017:II

Since 2009, median price up by nearly $109,000 – up 32%

The Inner Core Dominates Home and Condo Price Appreciation

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Greater Boston Home Price Gradient (Median Price vs. Distance from City of Boston in Miles) 2017

$775,278 $660,906 $565,208 $488,186 $429,838 $390,166 $369,168 $366,846 $- $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000 5 10 15 20 25 30 35 40

Miles from Boston The average price of a single-family home 40 miles from Boston is about ½ the price of a single-family home in the inner core

Source: Authors’ calculations based on Warren Group Data

Inner Core

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Greater Boston Home Price Gradients Percentage Change in Price 2009-2017 vs. 2015-2017

59% 46% 36% 28% 23% 20% 20% 23% 16% 13% 11% 9% 8% 8% 8% 9%

0% 10% 20% 30% 40% 50% 60% 70%

5 10 15 20 25 30 35 40

2009-2017 2015-2017

Ratio: 2.56

Ratio: 1.77

The home price gradient is flattening as prices further from Boston accelerate due to growing demand in more affordable communities

Source: Authors’ calculations based on Warren Group Data

Ratio: 2.56

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Greater Boston Condominium Price Gradient (Median Price vs. Distance from City of Boston in Miles)

$516,424 $437,354 $373,103 $323,673 $289,062 $269,272 $264,301 $274,151

$0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000

5 10 15 20 25 30 35 40

The average price of a condo 40 miles from Boston is about ½ the price of a condo in the inner core Inner Core

Source: Authors’ calculations based on Warren Group Data

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Greater Boston Condominium Price Gradients Percentage Change in Price 2009-2017 vs. 2015-2017

69% 55% 43% 33% 25% 19% 15% 13% 18% 14% 11% 8% 6% 4% 3% 2% 0% 10% 20% 30% 40% 50% 60% 70% 80% 5 10 15 20 25 30 35 40 2009-2017 2015-2017

• Poly. (2009-2017)
• Poly. (2015-2017)

Ratio: 5.30 Ratio: 9.00

But the condo price gradient continues to be very steep as demand for Inner Core condos remains very strong

Source: Authors’ calculations based on Warren Group Data

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Ratio of Single-Family Home Prices, 2017: Q2 vs. 2005: Highest Appreciation

Source: The Warren Group

2017 2005 Ratio Boston $ 3,050,000 $ 1,351,250 2.26 Cambridge $ 1,237,500 $ 667,500 1.85 South Boston $ 750,000 $ 409,000 1.83 Jamaica Plain $ 850,000 $ 498,000 1.71 Lexington $ 1,145,888 $ 705,000 1.63 Somerville $ 695,000 $ 428,500 1.62 Brookline $ 1,810,000 $ 1,120,000 1.62 Charlestown $ 950,000 $ 604,500 1.57 Newton $ 1,155,000 $ 760,000 1.52 Needham $ 984,000 $ 663,750 1.48 Winchester $ 1,078,750 $ 735,500 1.47 Melrose $ 620,000 $ 428,950 1.45 Arlington $ 720,000 $ 501,000 1.44 Concord $ 1,040,500 $ 725,000 1.44 Medford $ 564,500 $ 399,900 1.41 Dorchester $ 510,000 $ 365,000 1.40

0.96 to 1.00

Lincoln 0.96 Plympton 0.96 Plainville 0.96 Lowell 0.96 Georgetown 0.97 Randolph 0.97 Lawrence 0.97 Sudbury 0.98 Marshfield 0.98 Swampscott 0.98 Groton 0.98 Abington 0.99 Nahant 0.99 Salisbury 0.99 Littleton 0.99 Tyngsboro 0.99 East Bridgewater 0.99 Franklin 0.99 Whitman 1.00

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Annual Median Price of Condominiums in Five-County Greater Boston Region, 2000-2017

Source: The Warren Group

$176,686 $199,576 $242,520 $261,357 $287,938 $300,458$301,619 $306,523 $304,465 $279,911 $293,679 $302,137 $309,940 $333,579 $350,272 $405,724 $396,354 $402,279

$150,000 $200,000 $250,000 $300,000 $350,000 $400,000 $450,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017: II

With substantial condo production, condo prices finally stabilizing

Rents

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Greater Boston Rental Vacancy Rate 2000-2017:II

Source: U.S. Census Bureau

0.7 2.3 4.3 5.4 5.2 4.7 5.5 5.7 6.0 6.4 5.1 4.0 4.1 3.8 4.9 3.4 3.7 4.7 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Percent

Rent Stable Vacancy Rate: 5.5%

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Average Market Rent

Inner Boston Core

2009-2017 (August)

$1,859 $2,033 $2,158 $2,301 $2,367 $2,427 $2,667 $2,952 $2,874 $1,500 $1,700 $1,900 $2,100 $2,300 $2,500 $2,700 $2,900 $3,100

After rising steadily since 2009, apartment rents in the Inner Core communities of Greater Boston finally stabilized in 2017 … most likely due to construction of multi-unit housing and rising vacancy rates

Source: Reis.com

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Average Market Rent

Inner Boston Core

2009-2017 (August)

$1,859 $2,033 $2,158 $2,301 $2,367 $2,427 $2,667 $2,952 $2,874 $1,500 $1,700 $1,900 $2,100 $2,300 $2,500 $2,700 $2,900 $3,100

Yet the average annual rent is now nearly $35,500 per year!

Source: Reis.com

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Percentage Change in Housing Prices Single Family Price vs. Condo Price vs. Apartment Rent Greater Boston 2000-2017

48.2%

• 12.0%

32.0% 63.0%

• 2.8%

43.7% 6.2% 9.2% 54.6%

• 20.0%
• 10.0%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%

2000-2004 2004-2009 2009-2017

Single Family Home Prices Condo Prices Apartment Rents Apartment rents have now risen faster than single-family home prices and condo prices

Source: The Warren Group & Reis.com

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13% 21% 27%

0% 5% 10% 15% 20% 25% 30%

Median Renter Household Income Median Effective Rent Median Asking Rent

Pecentage Change in Greater Boston Rents (2000-2013) vs. Percentage Change in Median Renter Household Income (2000-2011) Since 2000, effective rents have increased 50% faster than median renter household income … leading to skyrocketing housing cost burdens for Working Families

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Rising Housing Cost Burden – Greater Boston

1990

2000

2010

2011

Renter-Occupied Households Paying More than 30% of Income

• n Rent

41.7% 39.2% 50.1% 51.3%

Renter-Occupied Households Paying More than 50% of Income

• n Rent

19.6% 18.4% 25.4% 26.4%

Owner-Occupied Households w/ Mortgage paying More than 30% of Income on HH Costs

28.3% 26.7% 39.5% 40.4%

2015 50.1% 34.6% 26.0% (Est.)

Source: American Factfinder

Foreclosures

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Annual Number of Foreclosure Petitions in Single-Family Homes in Five-County Greater Boston Region, 2000-2017 (Est.)

Source: The Warren Group

561 751 821 863 1,533 3,168 6,173 8,977 6,439 8,686 7,714 4,127 5,849 1,682 2,473 3,599 4,214 4,074 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (Est.)

Foreclosure Petitions on the rise again

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Annual Number of Foreclosure Deeds in Single-Family Homes in Five-County Greater Boston Region, 2000-2017 (Est.)

Source: The Warren Group

244 192 135 25 50 180 811 2,061 3,055 2,168 3,015 2,146 1,880 737 877 1,249 1,636 1,554 500 1,000 1,500 2,000 2,500 3,000 3,500 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (Est.)

Twice as many households will lose their homes to foreclosure in 2017 than 2014

What’s Happening to Rents in Older Housing Stock?

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Triple Decker …. 1910

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Triple Decker …. 2017

Millennials are doubling, tripling, and quadrupling up in Triple Deckers … outbidding working families for what was traditionally working family housing

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Students Living On-Campus vs. Off-Campus in Greater Boston 2016

No Impact

• n Private

Housing Market Low Impact on Private Housing Market Moderate Impact on Private Housing Market High Impact on Private Housing Market Total Number On- Campus Off- Campus Study Abroad/ Co-

• p

Off - Campus Commuter Living at Home Off- Campus University Managed Housing Off- Campus Not Living at Home Percent Living on Campus Percent Living Off Campus Not Living at Home Percent Off- Campus Commuter Living at Home Undergraduates 92,202 42,342 1,519 9,754 3,169 35,418 45.9% 38.4% 10.6% Graduate Students 56,979 5,570 123 12,432 305 38,549 9.8% 67.7% 21.8% Total 149,181 47,912 1,642 22,186 3,474 73,967 32.1% 49.6% 14.9% Source: Student Housing Trends 2016-2017 Academic Year, Department of Neighborhood Development, City of Boston

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Annual Median Price of Homes in Two-Unit and Three-Unit Structures in Five-County Greater Boston Region, 2000-2017

Source: The Warren Group

$225,460 $273,328 $347,050 $412,859 $458,565 $492,182 $483,192 $454,028 $263,289 $244,172 $275,885 $314,274 $355,418 $394,060 $443,084 $495,403 $521,225 $554,957 $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017: II Two-Unit Three-Unit

Since 2009 Triple Decker Unit Prices are up 127 Percent!

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There is virtually no doubt that skyrocketing Triple-Decker prices are due to the extraordinarily high demand for these units by graduate students, medical interns and residents, and other young professionals who can afford high rents by living with roommates, making this type of property extremely valuable as an investment asset … and increasingly out of the price & rent range of working families

Traditional Workforce Housing Priced Out of Reach of Working Families

New Housing in the Pipeline

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2014 2015 2016 Single Family Home 472 218 74 Two-Unit 453 232 94 Three-Unit 485 189 53 Four Unit 551 321 115 Multi-Family 425 221 119

Source: City of Boston Department of Neighborhood Development (DND)

Average Application to Permit Wait Time (in Days) by Housing Type

City of Boston

2014 - 2016 (September) A Major Improvement in Processing Housing Permits in Boston

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City of Boston Units of Housing 2000-2017 Q2

35,514 21,963 13,551 8,412

5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000

Permit Applications Permits Approved Units Completed Units Under Construction

+

Since 2000, nearly 22,000 units of housing completed or under construction – with another 22,000 permits approved

Source: City of Boston DND

Northeastern School of Public Policy and Urban Affairs  https://www.northeastern.edu/cssh/policyschool Affordable New Unit Permits as a Percentage of All New Permits City of Boston 1996-2016 (Est.)

39.2% 25.7% 18.3%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0%

1996-2003 2004-2010 2011-2016

While the number of new housing units has soared in Boston, the prevalence of luxury housing development has dominated in the past five years

Source: City of Boston DND

Northeastern School of Public Policy and Urban Affairs  https://www.northeastern.edu/cssh/policyschool Total Housing Permits Issued in Five-County Greater Boston Region 2000-2017 (Est.)

Source: U.S. Census Bureau

9,563 8,929 8,558 11,120 12,713 15,107 12,332 9,772 6,529 4,714 5,580 5,228 7,856 10,931 10,977 13,578 11,525 12,917

• 2,000

4,000 6,000 8,000 10,000 12,000 14,000 16,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (Est.)

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All Units 5+ Units 2016 2017 (Est.) 2016 2017 (Est.) Greater Boston 11,525 12,917 6,506 8,503 Boston 3,347 5,342 3,019 5,033 Greater Boston less City of Boston 8,178 7,575 3,487 3,470 City of Boston as % of Greater Boston 29.0% 41.4% 46.4% 59.2%

But the increase in Permitting is in the City of Boston Outside of Boston, Permitting is DOWN

Source: U.S. Census Bureau

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Number of Housing Unit Permits in Five-County Greater Boston Region by Structure Type, 2000-2017 (Est.)

Source: U.S. Census Bureau

6,376 2,682 3,798 3,847 660 1,180 653 567 2,527 7,564 1,929 4,098 9,127 6,506 8,503 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (Est.) Single-Family Two- to Four-Unit 5 or More Unit

Since 2011, a welcome shift toward multi-unit housing -- 4.4 X increase since 2009 reflecting the new demographics of Greater Boston

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Municipalities Permitting the Most New Units in 5+ Structures 2011-2017

U.S. Census Bureau

Municipality 2017 (Estimate) 2016 2015 2014 2013 2012 Total Units 2012-2017 Change 2016- 2017 1 Boston 5,033 3,019 4,705 2,475 2,361 2,361 19,954 2,014 2 Weymouth 470 314 50 43 877 156 3 Framingham 463 160 12 635 463 4 Sharon 386 386 386 5 Somerville 271 163 434 108 6 Cambridge 262 161 493 397 1,037 1,037 3,387 101 7 Stoughton 189 67 21 277 122 8 Chelmsford 185 185 185 9 Randolph 153 153 153 10 Canton 120 103 208 115 95 95 736 17 11 Quincy 110 93 197 108 100 100 708 17 12 Everett 103 101 154 421 413 413 1,605 2 13 Arlington 94 85 164 95 80 80 598 9 14 Stoneham 82 82 82 15 Winthrop 75 56 82 49 27 27 316 19

Source: U.S. Census Bureau

Northeastern School of Public Policy and Urban Affairs  https://www.northeastern.edu/cssh/policyschool 5+ Unit Housing Permits as a Percent of All Housing Permits in Greater Boston, 2000-2017

Source: U.S. Census Bureau

26.4% 30.0% 27.1% 42.8% 43.3% 50.1% 50.6% 51.1% 53.2% 40.9% 40.2% 43.9% 52.2% 58.2% 58.4% 67.2% 56.5% 65.8% 0% 10% 20% 30% 40% 50% 60% 70% 80% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (Est.)

Multi-Unit Housing: From 1/4 of all housing permits to 2/3 of permits since 2000

Public Funding of Housing and Homelessness Programs

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Real Operating Funds for Housing and Homelessness Programs provided by the Commonwealth (FY2018 $) FY2001 - FY2018

Source: The Massachusetts Budget Dashboard; Massachusetts Budget and Policy Center.

$354,279,623 $312,157,125 $253,955,992 $226,682,870 $260,963,657 $279,494,711 $302,787,917 $321,774,974 $311,413,547 $355,105,558 $371,167,769 $434,404,169 $438,733,651 $478,235,046 $447,301,006 $503,346,725 $465,273,675 $432,322,641 $150,000,000 $200,000,000 $250,000,000 $300,000,000 $350,000,000 $400,000,000 $450,000,000 $500,000,000 $550,000,000 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18

Sharp drop in State Funding for Housing and Homelessness Programs

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Total Real Federal Spending on Housing Programs in Massachusetts (FY2016 $) FY2001 - FY2018 (in $Millions)

Source: The Massachusetts Budget Dashboard; Massachusetts Budget and Policy Center.

$415.5 $423.9 $500.9 $519.2 $485.4 $503.0 $463.5 $484.1 $668.3 $757.0 $860.2 $666.0 $420.4 $458 .1 $483.6 $483.0 $539.2 $468.0 $300.0 $400.0 $500.0 $600.0 $700.0 $800.0 $900.0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Federal spending (FY2016$) Federal ARRA Spending (FY2016$) Fed Homeless (FY2016$)

Expected Sharp Drop in Federal Funding for Housing in FY2018 – Down 13%

Northeastern School of Public Policy and Urban Affairs  https://www.northeastern.edu/cssh/policyschool Total Real DHCD Spending (FY 2018 $) Including Federal Share FY2001-FY2018 (in $Millions)

Source: The Massachusetts Budget Dashboard; Massachusetts Budget and Policy Center.

$770 $736 $755 $746 $746 $783 $766 $806 $980 $987 $1,022 $1,022 $859 $936 $931 $986 $1,004 $900 $600 $650 $700 $750 $800 $850 $900 $950 $1,000 $1,050 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Total State & Federal Housing & Homelessness Funding down by 10% in FY 2018

New Policies to Advance Greater Boston’s Housing Agenda

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• The Baker-Polito administration has used more than $31 million in state and federal

low-income housing tax credits to leverage $218 million in equity to create or preserve more than 1,400 units of affordable housing.

• The administration is awarding more than $59 million in federal HOME funds and

state capital funds for these projects.

• The administration also unveiled a five-year capital budget plan that includes a $1.1

billion commitment to increasing housing production.

• The Massachusetts Senate passed far-reaching housing legislation that would

provide cities and towns with new tools for planning, zoning, and permitting with the explicit goal of encouraging re-zoning for more housing in general and more affordable housing in particular. The Massachusetts House will need to take up this legislation in its next session with all due speed.

New Commonwealth Housing Efforts

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The Walsh administration has redoubled efforts to meet its housing production goal of 53,000 new units by 2030.

• City land is being made available to developers of middle-class housing
• A new Office of Housing Stability has been created to help prevent

displacement of residents from their homes

• A new workforce-housing tax credit has been proposed for the city and the

Governor has been asked to allow local control for such a measure

• Significant reduction in permit wait times

New City of Boston Housing Efforts

Demographic Projections for Greater Boston

A Strong Economy retains and attracts a Growing Population … and a large number of new Households Projections to 2030

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City of Boston Population 1950-2030 (Projected)

801,444 697,197 641,071 562,994 574,283 589,141 617,668 630,195 641,911 651,090 659,180 665,984 673,184 724,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 1950 1960 1970 1980 1990 2000 2010 2011 2012 2013 2014 2015 2016 2030

After 1980, Boston begins to grow again Just since 2010, an increase of 55,500 And by 2030, Boston’s Population could reach nearly 725,000

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Metro Boston Population 2000-2030 Projected

Between 2015 and 2030, the population of Metro Boston is projected to increase by 328,000

Source: Metropolitan Area Planning Council 4,306,692 4,457,728 4,559,985 4,662,000 4,888,000

4,000,000 4,100,000 4,200,000 4,300,000 4,400,000 4,500,000 4,600,000 4,700,000 4,800,000 4,900,000 5,000,000

2000 2010 2015 2020 2030

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Projected Growth in the Population Within Metro Boston 2015-2030 Population Growth is projected to be concentrated in the Inner Core for the young and wealthy and Regional Urban Centers for most everyone else – given little growth in suburban housing supply Greater Boston Metro Region Population Growth Percentage Population Growth Inner Core 195,000 14.2% Regional Urban Centers 98,000 9.3% Suburbs 34,000 2.0% Metro Boston 328,000 8.1%

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Who’s Growing the Region? Boston-Cambridge-Somerville

• In 2000, 20-34 year-olds comprised 34.8%
• f the region’s total population
• Between 2000 and 2010, 20-34 year-olds were

responsible for 73.9% of the growth in the region

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Greater Boston Projected Population Growth by Age Cohort 2015-2030 All of the net growth in population through 2030 is projected to be among those who are or were Millennials and Seniors who are aging here

Source: Metropolitan Area Planning Council (36,000) 89,000 (67,000) 189,000 153,000 (100,000) (50,000)

• 50,000

100,000 150,000 200,000 250,000

0-19 20-44 45-64 65-74 75+

A New Demography Requires a New Form of Housing

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Increase in Number of Metro Boston Households by Household Size 2015-2030 (Projected)

This will mean a huge increase in demand for smaller housing units

106,000 105,000 22,000

20,000 40,000 60,000 80,000 100,000 120,000

Single Person 2-3 Persons 4+Persons Source: Metropolitan Area Planning Council

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Young Millennials Working Families Aging Baby Boomers

Need for Housing for:

A New Approach to Housing in Greater Boston

“The 21st Century Village” – Housing for Graduate Students, Medical Residents & Interns, and Other Young Professionals … as well as Aging Baby Boomers

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Goal: Free up Triple-Deckers in the City and Homes in the Suburbs

• By providing new housing opportunities for millennials, a

substantial number of units in Triple Deckers and duplexes could be freed up for working families in the Inner Core cities

• f Greater Boston.
• By providing new housing opportunities for aging Baby

Boomers who currently live in larger suburban homes, we can free up more of the existing suburban housing for working families.

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• Apartment structures -- Villages -- with:
• A range of units from small/”micro” apartment to studios and multi-bedroom units for

graduate students, medical students, and other millennials … as well as aging Baby Boomers varying in affordability from the low income graduate student to the more well-heeled student, young professional, and Senior.

• Common shared space with lounges, laundry facilities, seminar rooms, study space,

music practice rooms, work-out facilities, and offices that can act as small business incubators

• Ground floors to house retail establishments – a grocery store, drycleaners, coffee

shop

• Roof Garden for parties and BBQ
• Near public transit where possible
• Parking for Zip Cars, bicycles
• Storage Lockers in basement

Making the 21st Century Village Attractive

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This is the New Housing we need for tomorrow

Getting it Done: A New Collaborative

A Role for: Private Developers Quasi-public & Commercial Lenders Universities and Teaching Hospitals Architects and Construction Firms Unionized Building Trades Municipal Government State Government

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• 21st Century Villages will be produced by private developers

– for profit and non-profit - and these housing projects will remain on the city’s tax rolls.

• In order to maintain affordability, private developers will agree

to rental rates so that they make a reasonable, but not excessive, return on their investments.

Private Developers

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Massachusetts is blessed with a range of commercial lenders along with quasi-public agencies that could play a role in the financing of these 21st Century Villages including: MassDevelopment MassHousing Massachusetts Housing Partnership Massachusetts Housing Investment Corporation

Quasi-Public and Commercial Lenders

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• In order to assure commercial financing for these housing projects, local

universities and teaching hospitals should be encouraged to join together and agree to master leases for most of the units in each Village – with each of these non-profits agreeing to take a share of these leases with the right to trade shares if necessary among themselves.

• Local universities and teaching hospitals will market this housing to

their graduate students, interns, and medical residents.

• Units not occupied can be rented to others including recent alumni … as

well as seniors who wish to live in housing where there are many amenities and the spirit of young professionals.

Universities and Teaching Hospitals

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• Architecture firms will be encouraged to produce new designs for

affordable units including attractive “micro” units, studio apartments, and

• ther innovative apartment models with a range of common spaces –

including plans for construction using modular or panelized designs.

• Private firms, including construction companies, will be encouraged to

develop plans for a manufacturing facility in Boston or Greater Boston capable of producing a large number of modular or panelized units for these 21st Century Villages … drawing on new building techniques that reduce the cost of construction.

Architects and Construction Firms

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• In order to reduce the construction costs for these 21st Century Villages,

the unionized construction trades are encouraged to provide some relief on their normal labor rates in return for producing units in a modular/panelized manufacturing facility with improved working conditions.

• The construction trades will be encouraged to hire “apprentices” from

inner city neighborhoods and work with the region’s vocational schools to help provide the workforce for the new housing production facility.

Unionized Building Trades

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• In order to keep the units in these 21st Century Villages as affordable as possible,

municipal government is encouraged to:

• Reform zoning regulations to permit smaller unit sizes and allow higher

density development in these housing projects

• Reduce or eliminate parking requirements given the expectation that few of

these residents will have private automobiles

• Make surplus municipal-owned land available for the construction of this

housing stock at a substantial reduction in market price in recognition of the public benefit accruing to the community from the construction of these units

Municipal Government

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• In order to keep the units in these 21st Century Villages as affordable as possible, state

government is encouraged to:

• Use state bonding authority primarily through existing state quasi-public lending

agencies to provide low interest loans for the production of these Villages

• Consider the possibility of developing a state tax credit available to private

developers of these housing projects

• Make state-owned surplus land and MBTA sites available for these housing

projects at a substantial reduction in market price

State Government

Implementing the 21st Century Village Plan: A 10 Step Program

It’s time for aggressive concerted action

• n the Housing Front to meet the needs of

millennials, seniors, and working families

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• To move forward in an aggressive manner to develop a substantial number of 21st Century Villages, we propose

a 10-point implementation plan.

• Step 1: Form a new Housing Task Force to research the issue, and build community and business

support for the 21st Century Village concept.

• Step 2: The Housing Task Force should conduct a study of millennials and Baby Boomers to gauge the

extent of potential demand for 21st Century Village housing.

• Step 3: The Governor, along with local mayors, should convene developers, construction companies

and architectural firms to ascertain what is needed—in terms of new housing design, new building techniques, zoning reform, land availability and financing options—to successfully develop 21st

Century Villages.

Steps 1-3

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• Step 4: The Governor and the region’s mayors should meet with representatives of the various building

trades unions in Greater Boston to discuss their willingness to help meet the affordability goals of the 21st Century Village.

• Step 5: Together, this consortium of housing professionals can consider approaches based on

modular design and panelized construction using new materials and new, higher-productivity building

• techniques. The discussion should also investigate the technology and economics of building a state-
• f-the-art housing manufacturing facility in Greater Boston, where modular units and panels could be

fabricated and where young workers could be trained and employed.

• Step 6: With a firm plan for building the 21st Century Village, the Governor and the region’s mayors

could convene a meeting with local university presidents and hospital CEOs, as well as the other leaders of the business community, to discuss the role they can play as marketers and master lease holders of these new housing developments, making the financing of these villages more feasible.

Steps 4-6

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Steps 7-9

• Step 7: The state Department of Housing and Community Development (DHCD) would meet with the

neighborhood development and planning offices of the region’s cities and towns and MBTA officials to discuss publicly-owned sites for the possible development of 21st Century Village projects.

• Step 8: The state DHCD should encourage the planning departments of the region’s cities and towns to

implement zoning provisions needed to make a range of 21st Century Village typographies legal as-of- right and affordable.

• Step 9: Agreements should be established between universities, teaching hospitals, and

major firms working with developers to generate the plans for the first 21st Century Village based on master agreements and deed restrictions on rents and rent increases.

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• Step 10: Begin construction of the first 21st Century Village. Follow it up with many throughout

the region until the supply of new housing meets demand and the older housing stock is freed up at affordable prices and rents for working families and others in communities across Greater Boston.

With a coordinated effort, this plan has a chance of finally meeting Greater Boston’s housing needs and thus helping to maintain the Commonwealth’s prosperity – providing new housing for millennials and seniors and freeing up the older housing stock for working families

Step 10

Thank you!