Augustus: Market uncertainty may scare off housing investors

Photo | Timothy Doyle Construction of Worcester's Alta on the Row, which was completed in 2024.

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By Sam Drysdale | State House News Service

State government leaders in Massachusetts are trying to instigate a building boom to address a housing shortage marked by high rents and sale prices, but a top housing official is now warning that headwinds from Washington could threaten their efforts.

"The equity that's often needed to facilitate a deal doesn't like uncertainty, and we are in the midst of lots of uncertainty," Housing and Livable Communities Secretary Ed Augustus said in Lee on Wednesday during a policy talk with local experts hosted by the Berkshire Edge.

He added, "If you come in and want to fund a project, and you look at what the [financial estimate] says, but you're going to actually go in the ground 18 months from now, how could you guarantee that those are the prices that you're going to have, given this uncertainty?"

It's an argument Augustus also made earlier in the week, testifying before lawmakers in Gloucester on Monday about Gov. Maura Healey's fiscal year 2026 budget proposal.

"What developers tell me is equity, which they are usually pursuing in order to get the financing to build a unit, equity doesn't like uncertainty. And the idea that this project may cost 10 or 15 or 20% more than they're projecting, it doesn't often attract that investment," Augustus said on Monday.

The administration has long pointed to a goal of increasing the statewide supply of year-round housing by 222,000 units over the next decade — a 7% increase in supply.

As production slowed over the past few decades, the share of homes available for sale or rent in Massachusetts has shrunk to 1.6%, and costs have skyrocketed.

Programs focused on keeping low-income residents housed are struggling to keep up with housing inflation. The Massachusetts Rental Voucher Program has seen large increases in spending, without making a significant bump in the 160,000-person waitlist of people who need help paying rent.

"We're putting significant additional dollars into the voucher program, but not necessarily getting more vouchers. We're just having to pay higher rents for the vouchers that have already been leased so that we don't lose any of those units and have people fall into homelessness. So again, some of it is just, you're paying a lot more, but you're not necessarily getting more. You're trying to keep what you've got," Augustus said Wednesday.

A man at a podium in front of an apartment building

Photo | Eric Casey

Ed Augustus, housing secretary of the state of Massachusetts and former Worcester city manager, speaks in front of the District 120 affordable housing building during its July ribbon cutting.

The governor and Legislature passed a law last year that authorizes $5.16 billion in long-term bonding, mostly focused on production of new units. State officials are trying to put some of that money, and new production-oriented policies, to work in a state where building remains mostly under the oversight of local zoning rules.

The state housing secretariat estimates that the law will lead to the creation of over 45,000 new units and the preservation of 27,000.

The law was signed in August, three months before the election, and Healey and Augustus have both warned recently that policies coming down from President Donald Trump could threaten the planned production boom.

In addition to seeing a pullback of investors, the housing secretary warned Wednesday about Trump's tariffs on lumber making it more expensive to build housing.

"When you get most of your lumber from Canada, and that's subject to a 25% tariff, that is driving up the costs," he said.

Trump's promised tariffs on Canadian lumber are scheduled to start on April 2. The 25% tariff on softwood lumber used in most home building would be on top of the existing 14.5% lumber tariffs previously imposed by the U.S. Department of Commerce, according to the National Association of Home Builders.

At a National League of Cities Conference, Vice President JD Vance spoke Monday about the national housing crisis, calling it "not acceptable or sustainable" that the average income it takes to buy a new house is nearly two times the average salary of a typical American family.

"We want Americans to be able to afford the American dream of homeownership because we know that when people own their homes, it makes them a stakeholder. It makes them a stakeholder in their neighborhoods, in their cities, and ultimately, of course, in this country that all of us love so much," Vance said.

He pointed at the Biden administration, saying the cost of a median-price home more than doubled under former President Joe Biden. He mentioned how lower energy costs could aid housing development, and lamented how immigrants living in the country illegally are increasing the demand for limited housing.

In addition to urging people to be "a little bit smarter about our local zoning rules," Vance said the administration is working towards cutting red tape at the Office of Housing and Urban Development that "hike costs and shift the decision-making from local governments to Washington, D.C."

"I’m hard-pressed to think of a time in my 40 years of life where it’s been so hard for normal American citizens to afford a home," Vance said. "Even renting a home has become a challenge or, worse yet, fallen completely out of reach for so many of our families."