Moment of reckoning for housing and state economy

Restrictive zoning rules are hampering production, pushing up prices -- and pushing out young talent

THE MASSACHUSETTS ECONOMY is the envy of the nation. We quickly rebounded from the recession and are home to the nation’s best educated workforce and one of its largest and most diverse innovation economies. Unemployment is down to 4.5 percent and our growth is outperforming the national economy.

That success is worthy of celebration, but we can’t celebrate for too long. Unless we address the supply and cost of housing in Massachusetts it will be impossible for that strong economic performance to continue.

A bill approved earlier this month by the Legislature’s Joint Committee on Housing would confront that problem head-on. The bill would require that every city and town plan for multifamily housing and designate areas where it is allowed as-of-right. It would also require every community to allow single-family homes clustered on modest lots in compact, walkable neighborhoods surrounded by open space. Cities and towns would be compensated for any net increases in school costs that result from their approval of multifamily and cluster developments.

These may seem like simple legislative changes, but they will not be easy to achieve or without controversy. The only way to appreciate the importance of the bill is to understand how dramatically the housing development landscape has changed in Massachusetts over the last few decades.

Massachusetts home prices have increased sevenfold since 1980 -- more than in any other state (Federal Housing Finance Agency)

Massachusetts home prices have increased sevenfold since 1980 — more than in any other state (Federal Housing Finance Agency)

In 1980 our housing costs were close to the national average, ranking us 26th of the 50 states. Since then, steadily increasing local resistance to new housing development has kept us from building enough housing to meet the needs of our population. As a result, home prices and rents in Massachusetts are now among the highest in the US, our state is no longer an affordable place for young workers to launch careers and start families, and we are losing talent to places that offer good jobs and better housing choices.

Metro areas like Denver, Seattle, and Portland, Oregon, have been building two to three times as much housing per capita as metro Boston and growing their employment in innovation industries more than twice as fast.

MHP analysis of US Census Bureau's American Community Survey data.  A 3x ratio means that for every person that migrated from Portland, Oregon to Boston, three people migrated from Boston to Portland.

MHP analysis of US Census Bureau’s American Community Survey data. A 3x ratio means that for every person that migrated from Portland, Oregon to Boston, three people migrated from Boston to Portland.

We tend to ignore the housing problem by convincing ourselves that Massachusetts is special — that people with career options will always make sacrifices to work for great employers or to be in exciting places like Boston and Cambridge. The data tell a different story, though. It is already a struggle to attract and retain talent in Massachusetts. Some of our closest competitors in the innovation economy now attract as many as three new workers from metro Boston for every worker we attract from them.

Our inability to produce enough housing to fuel the economy results from the fragmentation of local government in Massachusetts. In many other parts of the country land, use regulation is managed at the county or regional level. In Massachusetts, it is handled by a multitude of local boards in each of 351 individual cities and towns, most of which serve a population of less than 11,000 residents. It’s understandable that elected officials take steps to slow or stop housing development because that’s what voters ask and expect of them: “please don’t allow more residents into our community,” “please don’t add any more kids to our schools,” “please don’t approve any more development in our part of town.”

Resistance to new housing often comes in the form of “downzoning” – allowing housing development in fewer places or at lower densities than was allowed in the past. It also comes in the form of discretionary zoning codes (as opposed to zoning “by right”) that make local decision-makers especially susceptible to community pressure. Available land zoned for multifamily housing used to be relatively commonplace in Massachusetts and now it has become a rarity. Many of the most desirable neighborhoods in the Commonwealth could not be built again today because local zoning has become so restrictive.

Many of the most desirable homes and neighborhoods in Massachusetts could not be built again today because of restrictive local zoning. In our “downzoned” economy the average lot for a new single-family home in metro Boston is now more than an acre – larger than an NFL football field.

Many of the most desirable homes and neighborhoods in Massachusetts could not be built again today because of restrictive local zoning. In our “downzoned” economy the average lot for a new single-family home in metro Boston is now more than an acre – larger than an NFL football field.

In recent years, we have defied the odds and managed to prosper without confronting our housing supply problem, but at some point our luck will run out.  The Commonwealth is now facing its greatest demographic challenge since the end of World War II, with a million older workers expected to retire from our workforce over this and the next decade. That includes about 747,000 baby boomers who are expected to remain in the Massachusetts housing market after they retire, many of whom will stay in their existing homes.

Those changes will make our current housing situation significantly worse. There isn’t nearly enough housing being built for new workers to fill existing jobs as they become vacant, let alone to support new job growth. Demographic projections from the Metropolitan Area Planning Council show that we need to produce nearly half a million new housing units in Massachusetts by the year 2040 to prevent job losses and achieve only minimal growth. Two-thirds of that projected demand is for multifamily homes, such as townhouses and apartments, much of it in cities and close suburbs with good access to jobs and transportation.

It may seem like a lot of housing construction is going on, especially in and around downtown Boston, but we’re still building less than half as much housing as we did when we had a smaller population in the 1960s, 70s and 80s. It’s a positive sign that more multifamily housing was permitted in Massachusetts in 2015 than at any time since the late 1980s. Yet if we sustained last year’s housing production for each of the next 24 years it would still only be sufficient, as baby boomers exit the labor force, to support annual job growth over the long term of less than a quarter of one percent. Our own analysis of metropolitan growth patterns across the US confirms that current housing production is a prerequisite for future job growth.

It is not a lack of high-level concern that brought us to this point. For more than three decades, Massachusetts governors have used their bully pulpit and their discretion over state funding to encourage cities and towns to allow more housing. Gov. Edward King’s Executive Order 215 required that state grants be withheld from cities or towns found “unreasonably restrictive” of new housing growth. Local housing partnerships were formed statewide under Gov. Michael Dukakis to foster the production of new housing. Gov. Paul Cellucci’s Executive Order 418 prioritized state funding for cities and towns that planned for housing growth. Gov. Mitt Romney implemented Chapter 40R, giving cities and towns millions of dollars in state incentives to zone for new housing. Gov. Deval Patrick created MassWorks infrastructure grants to support local growth projects.  Gov. Charlie Baker launched new community compacts while expanding MassWorks and making housing production a top priority.

Communities can achieve attractive results when their local zoning allows cluster development and multifamily housing.  Pictured above are the Riverwalk in Concord (top) and Hewitt’s Landing in Hingham.

Communities can achieve attractive results when their local zoning allows cluster development and multifamily housing. Pictured above are the Riverwalk in Concord (top) and Hewitt’s Landing in Hingham.

These gubernatorial initiatives have all been thoughtfully conceived and implemented. With state support, some cities and towns have shown terrific leadership in planning for housing growth. Yet despite these positive results, no one has been able to solve the underlying problem: Individual communities still have little motivation to support new housing. The new Housing Committee legislation represents something entirely different: It would shift the debate from whether to how our cities and towns allow the housing production we need to support a strong and economically viable Commonwealth.

Defenders of the status quo talk about the “fundamental right” of cities and towns to regulate land use. Without saying so, they are defending the right to obstruct well-planned development simply because it’s politically unpopular.  That argument is ironic because local government has the most to lose. Without more robust growth in our housing stock, total employment will decline, the state’s tax base will erode, and there will not be nearly enough revenue to support local schools and other existing city and town services.

Meet the Author

Meet the Author

Massachusetts can do better than that. It is possible to set minimum local zoning standards in a way that promotes local planning, protects local budgets and respects our tradition of home rule. The Housing Committee chairs, Rep. Kevin Honan and Sen. Linda Dorcena Forry, have taken just that approach with the bill they advanced. It sets the stage for a public debate that is long overdue.

Clark Ziegler is executive director of the Massachusetts Housing Partnership. Christopher Oddleifson is chairman of the Massachusetts Housing Partnership board and president and CEO of Rockland Trust.

  • Mass Confusion

    The picture of a house on the football field is clever, but it’s way under scale (~50-60%), to the point that it is misleading.

    • Suburbian

      I dunno, it looks right to me–it starts on the 15 yard line and ends on the 40, so that’s 25 yards or 75 feet long–that’s a honking big house, at least 4,500 s.f.!

      • Mass Confusion

        NFL hash marks are 18.5 feet apart. So in the picture, that house is about 16 feet deep.

  • priscot

    “Metro areas like Denver, Seattle, and Portland, Oregon, have been building two to three times as much housing per capita as metro Boston and growing their employment in innovation industries more than twice as fast.”

    Are we really comparing the dense Northeast, with the expansive West? This article felt like a propaganda piece. Develop develop develop, and dont question why.

  • Bostonshepherd

    There are many built-in reasons why housing is so expensive in MA the availability of land being one of them. As one of the oldest settled areas in America, eastern MA is pretty densely packed. Building land is scarce.

    That said, the very long list of state and local land use regulations are huge contributing factors to the high cost of housing. There’s plenty of state law which restricts the production of new housing. The Wetlands Act and Rivers Act are 2 which come to mind.

    There are modern and creative ways to fulfill the intent of the acts, like wetlands replication and relocation, that would go a long way to opening more area to development while still preserving and possibly increasing total wetlands acreage. But good luck getting your local Conservation Commission and the DEP to consider creative solutions so a few more house lots can be created.

    There are dozens of these entitlement restrictions which, over the years, have chipped away at the stock of buildable suburban land. All the 40B’s and 40R’s in the world don’t matter if your land has been designated as wetlands (and they are usually not even wet.)

    • Sophie Jones

      the solution then is build higher. How many buildings near you are more than 2 stories?
      probably none. All those two story houses, and Cape Cod cottages take up a buttload of space that could be better used. Towns need to think about that: but they need an incentive to do it, otherwise they aren’t going to. That’s what the 40B does.
      And think more basic: I don’t need a whole house. I just want a roof, a shower, a bedroom.

  • Bostonshepherd

    Another reason for the high cost of housing — property taxes. We’re a blue state, with blue state spending habits. This causes local property taxes to soar. We demand great schools, sure, but that’s no reason why we need to build $200 million high schools like the new Newton North. You want quarter-billion dollar school buildings? It’ll be expensive to live here.

    A $500,000 home in Newton, if that even exists, pays $500 per month in property taxes. At a 30% marginal income tax rate (25% fed and 5% state), that’s the equivalent of $8,500 of gross annual income. The same house in Sherborn pays close to $10,000…that’s $14,500 in gross salary.

    In other parts of the country that same house costs $250,000 or $300,000, and property tax rates are probably lower. You used to be able to point to NH and say, “yeah, they don’t pay state income tax or sales tax, but their property tax rates are sky high.” Not so much any more.

  • Bostonshepherd

    I would want to see more details about MA’s net migration numbers. Since we have a ton of college students living here for 4 years, are they counted in the number if then leave the state upon graduation? If 200,000 graduating seniors leave upon being graduated, how does that distort the number?

  • Bostonshepherd

    How come no mention of the effect of union-dominated construction trades on housing costs? I’m in the housing industry — depending upon the project, union labor increases total construction costs anywhere from 20% to 50%.

    And it’s not the labor rates. It’s the work rules.

  • DStDenizen

    Why no mention of 40B reg’s? If a community has less than 10% “affordable” housing, developers can pretty much ignore local zoning. When 40B housing is actually built, the “new workers” which you cite as a concern here often make more than the 80% of the median income of the area that would qualify them for such housing. How much of our housing stock is 40B?

    And how much is Section 8?

    The state should focus more on “middle class housing” if it really wants to retain these jobs and workers, as opposed to encouraging more housing for those who can’t or won’t fill the jobs being bemoaned here.

  • Do better with better civic engagement… Civic engagement means access to Public Documents kept out of reach by Boston City Clerks Office and Council Central Staff of Boston City Council. New staff with better knowledge of technology/software are needed to make available online the Public Documents kept out of reach. For example, releasing online the Stenographic Record of Public Meetings of Boston City Council for hard of hearing folks, for the Deaf Community, for ESL English as a Second Language folks, for folks with different cognitive strengths, for all folks.

  • PreserveLocalDemocracy

    The authors wrote: “…without saying so, they are defending the right to obstruct well-planned development simply because it’s politically unpopular.” If something is politically unpopular that is the same as saying voters don’t want it. I believe that’s called democracy. We elect local leaders who make the local land use policy that we want in our cities and towns. Now developer-friendly state pols want to erase the MA tradition of home rule. Any state legislator from outside of Boston who votes for this is asking to lose their seat in their next election. “Well-planned development”? Seriously? Well-planned by for-profit developers and land speculators? With guidance from the tyrannical, unelected bureaucrats of the totally corrupt and co-opted DHCD? The Housing Committee must be in the pockets of big developers and the building trades unions, and so, it seems, are the authors of this piece of propaganda posing as journalism.