Don’t pit housing crisis against climate crisis

Going too hard on climate could undermine housing production

TODAY IN MASSACHUSETTS,  both the Baker administration and the Legislature – and some individual communities, too – are working on proposed “net zero” policies to address the climate crisis.  Dramatic building code changes are intended to reduce greenhouse gas emissions from buildings. However, they would undeniably also impose increased costs on new residential construction, and therefore have real potential to worsen the state’s already dire housing crisis if not considered through a lens of both housing and climate.

As the result of decades of declining housing production, the economics of supply and demand have driven the price of Massachusetts homeownership beyond the reach of an unprecedented number of families, with rents following suit.  COVID-19 only worsened this crisis, and the drastic increase in housing costs is jeopardizing the state’s economic competitiveness.  When employees cannot afford housing, companies are pressured to leave the state, and we risk losing good jobs that took decades to create.

It is shortsighted to pit the housing crisis against the climate crisis.  We can, and must, advance housing production hand-in-hand with climate policy.  Massachusetts can lead in both areas by supporting the growth of “net zero” construction industries, expanding modernized building trades, and implementing economic programs to offset the additional costs of construction under new “net zero” building codes.

One element of the landmark climate law signed by Gov. Baker in March 2021 directed the Massachusetts Department of Energy Resources to develop a “net zero” energy code in coordination with the Board of Building Regulations and Standards.  The DOER is on track to release this code by year-end, after which cities and towns can choose to adopt it as a tool in reducing fossil fuel emissions.

In theory, a “net zero” code means that energy used to heat, cool, or power a home will be at least offset by energy generated on site or nearby, resulting in “zero” net energy needs met by fossil fuels – the burning of which contributes to climate change.  This well-intentioned approach has a major caveat: implementing a “net zero” building code will add to the cost of building new housing, especially in the earliest years of introducing such a dramatic code change, and particularly for the production of the type of affordable and workforce housing that Massachusetts needs most.

The median home price in Greater Boston is already an eye-popping $789,500 – up 10 percent in just a year.  The added cost of constructing new “net zero” homes is estimated to be in the tens of thousands of dollars because of more expensive systems, building materials, and skilled labor.  Unfortunately, standard mortgage underwriting does not take into account long-term energy bill savings, and these costs must come from the pockets of home buyers.

In Massachusetts, for every $1,000 increase in median home price, approximately 2,000 families are priced out of the market, according to the National Association of Home Builders.  Families of color are disproportionately impacted by this metric as currently only 34 percent of Massachusetts households of color own their home compared to 46 percent nationally. This gap is the sixth largest in the nation, according to MassHousing.

Higher construction costs also will affect housing production.  Some projects will simply fail to “pencil out” as financially viable in areas of the state where higher rents cannot be supported or higher purchase prices exceed what new buyers can afford.  That does not bode well for Massachusetts, which had only 4.5 percent more housing units in 2020 than it did in 2010 – but grew its population by 7 percent over the same decade.

Further complicating matters, the state Senate recently passed a climate/energy bill that would allow up to 10 communities to adopt complete bans on new fossil fuel hookups, meaning new homes would not be allowed to use any natural gas for either heating or cooking.  The building code may ultimately be headed in this direction, but different rules for different communities only adds confusion and further stymies new housing production.

Last week, the Senate and House created a conference committee to reconcile their respective climate-related bills, and the DOER is in the process of finalizing its opt-in code.  Through these processes, we have both the opportunity and obligation to calculate the cost implications of every new requirement, consider their impacts on housing affordability and production, and place alongside every new climate measure the tools to offset increased costs and support increased housing affordability.

Meet the Author

Rob Brennan

Cape home builder/ State director, Home Builders & Remodelers Association of Massachusetts
Massachusetts should support “net zero” housing production similar to the way we turbo-charged solar energy production – with financial credits, robust rebates and low-interest loans.  We must take big steps forward on climate policy – without going backward on housing production.

Rob Brennan is a home builder on Cape Cod and a state director of the Home Builders & Remodelers Association of Massachusetts.