For middle-class families, a house in the suburbs is a dream that's becoming more elusive than ever.
Photographs by Flint Born
TRACEY AND SEAN FRANCIS used to look forward to Fridays, but not for the usual reasons. That’s the day The Patriot Ledger newspaper carries its big weekly real estate listings covering the South Shore area where they both grew up, and where they hope to raise their two young daughters. In those small inky ads describing sun-splashed kitchens and cozy family rooms, the young couple saw their future.
For the past several years, though, they’ve been bunking down with five-year-old Emily and three-year-old Megan in the split-level ranch in Hanover where Tracey grew up- and her parents still live- trying to squirrel away enough money for a down payment on a house. But as fast as they’ve saved, home prices have only climbed faster.
With every dime they had scraped together, Tracey and Sean Francis might have qualified for a house costing as much as $200,000. But the message from brokers in the area, where even modest three-bedroom homes are fetching $225,000 or more: Good luck finding one. “I’m in a good trade and I make a decent wage,” said Sean Francis, 31, a member of the Pipefitters Union who earns $47,500 as a licensed HVAC technician, enough to put his family just shy of the state’s median household income of $49,505. Tracey Francis, 30, did secretarial work before having children, but figures until they are in school, she could make only enough to cover day care costs.
For a young family to get into a house these days, said Tracey’s father, Dick Dunham, a state elevator inspector, “You almost have to hit the lottery.”
Which, in a way, is what happened. Just when the Francises figured their prospects were hopeless, Tracey’s mother, Jo-Ann, a part-time hairdresser, stepped forward to offer them $20,000 from a recent inheritance from her mother. So they’ve put a deposit on a three-bedroom raised ranch in Carver, agreeing to a price of $219,900.
Although their new home needs a new roof and the move 20 miles south will add an hour a day to Sean’s commute to and from work in Boston, Sean and Tracey Francis count themselves lucky. If not for the unexpected family help, Tracey says now, “We’d still be looking, and very discouraged.”
Thousands of Massachusetts families like the Francises are caught in the vortex of a housing market that has spun prices seemingly beyond their reach. Home prices in the Bay State have soared 53 percent since 1995 alone, the largest jump in the nation over that period. The median price of a single-family home sold in the Boston area last year was $356,600. In only nine of the 127 cities and towns in Greater Boston could a family earning the median income in that community afford a home at the median price of homes sold there in the first half of last year.
“The situation threatens a fundamental social contract,” says Nicolas Retsinas, director of the Joint Center for Housing Studies at Harvard. “That contract says if you work, you can find a decent place to live. And if you’ve got a good job and work really hard, you can achieve the American dream- home ownership. That contract is void here.”
Conventional thinking says that social contract has simply taken a beating from a red-hot economy where rising income, especially from the big stock gains of the late ’90s, has fueled the demand for bigger homes, pushing prices through the roof. But New Economy incomes and wealth don’t tell the whole tale of the home-price runup. The other part of the story involves a constellation of less visible forces that have conspired to help drive the cost of housing up even further. The collective impact of locally driven land-use decisions- coupled with the absence of any meaningful state strategy to counteract the trend- has worsened a housing crunch that reaches well beyond the ranks of low-income residents and into the heart of the middle class.
In classical economic terms, say housing experts, the rising price of housing can be explained by growing demand and unresponsive supply. Driving the strong demand has been the state’s robust economy, which has given Massachusetts the seventh highest median household income in the nation, almost 20 percent above the national average.
Population growth in Massachusetts, on the other hand, has been well below the national average, a factor that ought to temper housing demand, and therefore prices. But the number of households has been growing faster than the number of people. While the state population grew by only 2.2 percent between 1990 and 1998, the number of households increased by 4.4 percent, or twice as fast.
“The decline in the average size of households means that even with a very small overall population increase, you’ve had a very large increase in the demand for [housing] units,” says economist Barry Bluestone, director of the Center for Urban and Regional Policy at Northeastern University.
The housing supply pipeline, however, hasn’t kept pace even with a nearly stagnant population. Taking the annual national rate of housing production of 28 new homes per thousand residents as his benchmark, economist Edward Moscovitch calculates that slow-growth Massachusetts should be building 25 new homes per thousand residents. Instead, we build just 15 homes per thousand.
Although housing permits issued in Greater Boston did rise between 1995 and 1999, from about 6,500 to 8,400, since 1992 the number issued statewide hasn’t budged, remaining between 18,000 and 19,000 per year. The result: Massachusetts’s near cellar-dweller ranking as 47th in the country in per capita issuance of new housing permits.
“Certainly the very strong economy explains a good part of the demand side,” says Bluestone. “But it doesn’t explain the supply side. If all of a sudden the public wanted more Pontiacs, you can bet your bottom dollar General Motors would be producing all the Pontiacs they want.”
Homebuilders say they’d love to churn out Pontiacs, but soaring land costs and local zoning rules make it nearly impossible to build anything other than Cadillacs these days. Gary Ruping, a Burlington homebuilder, says as recently as 1995 he completed a development of 25 modest-sized, 1,800-square-foot colonials and capes in Woburn, which sold for about $220,000 each. But in the towns north of Boston where he does most of his work, land prices have doubled in the last five years. As a result, he says, “I can’t produce that housing anymore.”
“If you’re paying $200,000 for a building lot, you can’t build a house for $300,000,” says Ruping, who co-chaired a recent state commission charged with identifying barriers to housing production. As for first-time buyers in the market today, he says, “if they want to buy a new home, they’re looking beyond [Interstate] 495.”
Even in densely built eastern Massachusetts, however, the rising cost of land is a product of more than immutable economic forces. Many cities and towns have taken steps to make buildable land more scarce–and therefore more expensive. In an October 2000 study on the state’s housing shortage, the Executive Office of Administration and Finance found that, in a sample of 16 Massachusetts communities, new construction was allowed at only half the density of existing residential districts. In other words, for new homes, towns were requiring lot sizes twice as big as those where homes were already standing.
The scarcity of developable land–and therefore its high price–is not “a case of natural constraints, but of something we’ve decided to do,” says Carlo DeSantis, a deputy policy director in the state budget office and co-author of the report. In addition to increasing minimum lot sizes, at least 45 municipalities have adopted explicit growth control bylaws that limit the number of housing permits each year, while some maintain outright bans on construction of multi-family housing.
“Prices are high because we artificially restrict production,” says Moscovitch. Whatever the other economic pressures on families trying to crack into home-ownership, measures that constrain home building, he says, “systematically make it worse.”
The housing crunch is not all that growth restrictions have made worse. Ironically, the municipal mania over zoning and land use has spread sprawl wider across the landscape. Despite the state’s sluggish rate of home building, during the 1990s land has been gobbled up by development in Massachusetts at the fifth highest rate in the nation, when adjusted for population growth, according to the federal Natural Resources Inventory.
Families don’t pay
The suburban resistance to growth has gotten to the point that the not-in-my-backyard mentality once reserved for battling low-income housing or other development seen as undesirable is increasingly rising up to oppose virtually any housing at all. “We’ve come from a time when affordable, subsidized housing was a target to a time when any development is a target,” says Clark Ziegler, executive director of the Massachusetts Housing Partnership Fund, a state agency that supports development and preservation of affordable housing. “The NIMBYism has broadened from certain types of people to any more people.”
The reasons for the heightened resistance to new residential growth are varied, ranging from generalized angst over the loss of open space and community character to practical worries over local water supplies and septic system capabilities. But if you ask local officials what the driving factor is, they’ll tell you the bottom line is the bottom line.
“I think it all comes down to money,” says Stephen Smith, executive director of the Southeastern Regional Economic Development and Planning District, which provides planning assistance to 27 cities and towns in the fast-growing southeast area of the state. Indeed, municipal leaders and town planners are increasingly attuned to the financial implications of any type of development. And when they do the math, calculating the cost of municipal services versus the revenue from property taxes, housing doesn’t pay.
“Towns understand that every home they allow is a money loser for them, unless it’s a very expensive home,” says Smith.
The main reason: schools.
According to the Administration and Finance office study of the Bay State’s housing shortage, even factoring in property-tax revenue and additional per-pupil state education aid, each new single-family home brings with it, on average, $800 in unrecovered education expenses. That’s because, notwithstanding more than $7 billion in state aid pumped into local schools since passage of the Education Reform Act in 1993, when it comes to educating the state’s children, cities and towns still pay most of their own way. In fact, the 44.7 percent share of public education costs covered by the state puts Massachusetts in the bottom third nationally when it comes to state support for local schools. And with state education aid skewed sharply toward cities and other low-income communities, the outlying suburbs that are ripe for development get far less school funding from the state–as little as 15 percent of state-mandated “foundation” budgets in the most affluent communities.
In Plymouth–where the state pays just 33 percent of local school costs–a consulting firm recently developed for local officials a “service demand index” that gauges the costs of four types of residential development. The service cost to the town of a single-family home likely to house school-age children would be $8,641. Only at assessed values above $474,500 do such homes return to town coffers more than they draw in services, according to the report. In contrast, maintaining or expanding the town’s stock of empty-nester households- whose service demand is just $2,215- would help America’s Hometown remain on solid fiscal footing.
The consultant report cost the town $187,000, but it “was worth it to get the information we got,” says town manager Eleanor Beth–even if some of the conclusions were ones “you might have known instinctively.” Indeed, well before the report was issued, Plymouth town meeting signed off–after twice rejecting the plan–on a massive 3,000-home project right out of the not-yet-commissioned report. Homes in the Pinehills development, which are spread along 1,000 acres in an area west of the town center, will range in price from $330,000 to $1.5 million. In one-third of them, at least one resident must be 55 or older–a not-so-subtle way to ensure a limit on the number of schoolchildren. The senior citizen welcome wagon was rolled out again in January, when Plymouth’s planning board approved an 84-unit seniors-only project slated for the Manomet section of town.
“Obviously we would prefer from a financial standpoint more higher-end homes and age restrictions,” says Beth. Plymouth has always been a place that “has opened its arms to large numbers of families,” she insists. In looking to ensure that the next wave of new residents pays into the town budget more than it takes out, she says, “we’re just looking for a balance.”
“Looking for a balance” is a phrase that’s repeated over and over by municipal managers who say they’re struggling to steer development in a direction that will keep their budgets balanced as well. Officials from Weymouth, Rockland, and Abington, for instance, have spent years weighing plans for the former South Weymouth Naval Air Station, which closed in 1997. The sprawling 1,600-acre site reaches into all three towns, which teamed up to form the South Shore Tri-Town Development Corp. to oversee its redevelopment.
After a plan for a massive $250 million retail complex was shelved, a new scheme for a mix of commercial office space and housing has gained traction. But one thing is conspicuously absent from the mix: kids. The 300 apartments slated for the first phase– and the 400 more that could follow down the road—will all be restricted to elderly residents.
Weymouth Mayor David Madden says it’s no accident that family housing is not in the cards. “There was no question when the communities were drawing up the plan, they did not want to see that type of housing because of the impact on the communities,” says Madden. “When you look at the education costs, we’re right now in Weymouth struggling with how we’re going to provide sufficient funding for students” who are currently in the schools.
The story is much the same across eastern Massachusetts, where 10 communities have enacted zoning laws providing for age-restricted housing, and half a dozen more are now weighing such moves, according to Ed Tarallo, deputy director of the Metropolitan Area Planning Council. In other communities, local officials are steering apartment developers toward building studio or one-bedroom units.
These measures represent “different ways, publicly and privately, to say, ‘don’t bring any new kids,'” says state Sen. David Magnani, a Framingham Democrat, who terms the various maneuvers “vasectomy zoning.” The resistance to new housing development–especially more affordably priced housing for families–will remain fierce, says Magnani, “as long as suburban communities receive 10, 15, 20 percent of the cost of educating their children from the state and the other 80 percent is left for municipal finances.”
“Every town wants high-end housing that will pay for the schoolchildren that will be housed there,” says Al Lima, the director of planning for the city of Marlborough. “You can’t blame them.”
Maybe not. But the sum total of these municipal decisions, each of which has what Moscovitch calls “a sort of perverse validity” from the local standpoint, is a de facto development policy that makes construction of starter homes a thing of the past–and families with children a plague to be avoided.
That makes even the town officials who have made a science out of this development cost-benefit analysis uncomfortable. Asks Eleanor Beth, the Plymouth town manager, “When did being a family become a bad thing?”
“No system can be fair that creates that strong a bias against family housing,” says Ziegler, of the Massachusetts Housing Partnership Fund. The question is, will the state stand idly by while such an anti-family system takes root?
Changing the equation
To date, the state’s sole response to suburban exclusivity is Chapter 40B, the state’s anti-“snob zoning” statute. The law, which dates from 1969, gives the state authority to trump local zoning officials by issuing a “comprehensive” building permit to any government-financed affordable-housing development, defined as rental or ownership housing with 25 percent of units reserved for households earning no more than 80 percent of median income in the area. The increasing use of this legal end-run around local planning authorities has triggered a revolt by suburban legislators (see “Anti-‘Snob Zoning’ Law Turns Developer’s Tool,” page 68).
But while Chapter 40B is a powerful tool for overriding local self-interest, it does nothing to change the municipal calculus. “The drawback has been that it’s all stick and no carrot,” says Howard Cohen, president of Beacon Residential Properties, which has filed a 40B proposal for a 198-unit apartment complex in Marshfield. “One of the reasons those of us who are housing advocates hold onto 40B so tightly is there is no real movement toward a more rational process.”
No movement, perhaps, but there have been a few overtures on the cost-of-local-services issue. In the fiscal 2001 budget, the Cellucci administration proposed redirecting $47 million of local aid money to towns that approved new housing construction that would not be “self-supporting” on the municipal ledger. The following year, the administration tried a similar approach, using $22 million of the growth in lottery revenues.
“What we were saying is, hosting this housing is a shared burden, but only some towns are bearing it,” says DeSantis, the administration and finance policy official. But neither the Legislature nor municipal officials wanted any part of such redistribution schemes.
“They came up with this ridiculous notion of taking money from one community and giving it to another- a zero-sum game,” says Geoffrey Beckwith, executive director of the Massachusetts Municipal Association. “For a schoolchild in one community to win, a schoolchild in another community will lose. It was ignored because it’s a total nonstarter.”
More recently, a commission on barriers to housing construction appointed by Gov. Cellucci before he left office again recommended using local aid bonuses to defray municipal costs associated with new housing. The commission also suggested other measures that would limit or override local impediments to development, such as giving the state Department of Environmental Protection authority to reject local septic-system regulations that exceed state Title V standards and requiring municipalities with growth-control bylaws to spell out the problems they are attempting to ward off and set a timetable for addressing them.
But the local aid proposal continues to get the same cold shoulder as before. And given the heavy home-rule preference in the state, there’s been no rush to embrace policies that would usurp municipal control over land use.
“I’m not optimistic that the recommendations coming out of the Barriers Commission can be implemented anytime soon,” says Aaron Gornstein, executive director of the Citizens Housing and Planning Association.
He’s not the only one. Acting Gov. Jane Swift didn’t even bother to include the local-aid/housing link in the budget she submitted to the Legislature in January. “We proposed that in the past,” says Swift. “The issue that we always run into is that municipal officials would like that to be additional local aid, not existing forms of local aid.” Under the current fiscal clouds, that is clearly not in the picture.
But there are other ideas being floated to address the school-cost issue directly. State Rep. Peter Larkin, Democrat of Pittsfield, the House chairman of the Legislature’s education committee, and economist Edward Moscovitch have been talking about ways to tie state education aid to housing construction. They haven’t yet drafted a formal proposal, but the idea is to grant communities additional state education aid for every new housing unit they permit. To encourage family housing–and discourage sprawl–they say the state might offer more aid for family-sized housing units, as well as for multi-family dwellings or “cluster” developments that use less land.
Meanwhile, the Senate chairman of the housing committee, Sen. Steven Panagiotakos, a Lowell Democrat, is also looking for ways to untie the housing/schools knot. Since it takes two years for enrollment growth to be counted in the formula for state education funding, Panagiotakos has proposed awarding communities additional aid of $4,500 per year for two years for each new housing unit built under Chapter 40B. The plan didn’t survive the protracted negotiations for the 2002 budget, but Panagiotakos has proposed it again in a package of housing bills now pending in the Legislature.
Even a complete state takeover of school financing- which no one is proposing- might not be enough to get some growth-averse communities to welcome an influx of families of modest means, and their children, with open arms. But finding a way to neutralize the drain families with school-age children impose on municipal budgets might take the local curse off new middle-class housing.
Such a financial sweetener may not “make all the opposition go away,” says Sharon Krefetz, a Clark University professor who has studied the state’s 40B law. “But I think it makes it a lot easier to reason with reasonable people.”
But it’s hard to avoid the conclusion that, left to their own devices, most suburban communities will continue to see it in their best interests to prevent housing construction altogether, or to limit it to the sprawling large-lot developments that are consuming land at a breakneck pace but show up as net positives on the municipal balance sheet.
“Town meeting to me is the purest form of democracy. But I can also say in the same breath it’s the biggest challenge we have to affordable housing and smart growth,” says Helen Lemoine, a Framingham planning board member who also serves as chairwoman of the Metrowest Growth Management Committee, which is trying to promote regional approaches to development. “People want their homes on big lots. And when that’s what they want, it’s very hard to convince them it’s not good for them.”
Some think the best solution would be a system of greater regional or statewide control over development, approaches that have been taken in different forms by several states, including Maryland and Oregon. But the odds of bringing such a model to Massachusetts seem long. “To say that regional government hasn’t captured the hearts and minds of voters of Massachusetts is understating it by a lot,” says Retsinas, the Harvard housing expert.
Still, Retsinas and other planning experts say there are lots of other ways to approach the problem that could prove more politically palatable. A rejection of strong state or regional authority over development, for example, “doesn’t mean we have to pay for public school systems the way we do now,” says Retsinas. Nor, say others, does it mean we couldn’t ratchet up the incentives from the state to enact more “smart-growth” zoning policies at the local level.
“Obviously the problems are seemingly daunting,” says Larkin, the House education committee chairman. “But we need to think creatively…Either we succeed together or we fail together. We’re foregoing that generational compact that used to have one generation help another. We have to think of a new rubric.”
The time would seem ripe for a new rubric around housing and growth in Massachusetts. Stratospheric real estate prices show little sign of easing, and business leaders continue to sound the alarm that high housing costs are not only crushing the ownership hopes of those on the lower economic rungs, but are also making the Bay State an increasingly inhospitable place for the middle-class professionals needed to drive our information-based economy. Meanwhile, the sprawling consumption of land, driven by the preferences of local communities, is generating a regional mess. But addressing such issues means overcoming the natural instinct of those who have got theirs to keep it all to themselves.As president of the Home Builders Association of Massachusetts, Len Gengel can’t hide his vested interest in boosting house construction. But as the youngest of eight children of a Worcester firefighter — “regulated poverty,” he calls his childhood — Gengel says he’s also driven by his identification with families struggling to buy a home in a region where the real-estate deck seems stacked against them.
“It comes down to the haves and the have-nots,” says Gengel. “The haves make all the rules, so the have-nots will not have. It’s an American tragedy, and it’s happening right here in Massachusetts.”