New Report Details Housing Market Recovery
The housing market in Greater Boston continued to rebound in 2013 with rising home prices and sales, increased housing production and fewer foreclosures, yet a lack of affordable housing hinders the recovery, according to a report released Thursday.
Affordability remains a problem, especially for renters, the Dukakis Center for Urban and Regional Policy at Northeastern University reported. And it's not just due to the recent increase in housing prices.
Researchers reported the overall cost of living in Greater Boston has increased twice as fast as median homeowner household income since 2005, and three times faster than the median income of renter households. Also, income growth has been fastest since 2005 for the highest earners, with Boston's population growth driven in recent years by spikes in the number of poor and wealthy residents.
Housing and Economic Development Undersecretary Aaron Gornstein said during a Boston Foundation forum that fewer foreclosures and price increases are indicators of market stabilization. "There's very good signs in the housing market but it also puts additional pressure as you know on low-income families and that's the affordability issue that we've all been working on for so many years," he said.
Citing a "huge increase in homelessness in Massachusetts among families," Gornstein said, "We're really working every day to try and reduce the numbers of families in the motels, but it's become very difficult over the summer. But we're deploying every resource we possibly can to make a dent into that problem."
Rise In Multi-Family Housing
Through August, 5,500 multi-family housing units have been produced statewide, 65 percent more than the same period in 2012, Gornstein said. Multi-family housing is on its most productive pace since 2006.
Gornstein noted that Gov. Deval Patrick in June announced an award for 700 units of new affordable housing. "We're going to be announcing an additional 1,000 units of affordable housing in November," he said, although that announcement hinges on passage of a housing bond bill now before conference committee.
Later this fall, he said, the first homeownership development round "in many years" will be announced to help moderate income families buy their own homes. And as the administration tries to hold housing authorities more accountable, Gornstein said, the state is increasing housing authority operating subsidies, trying to get currently vacant housing units back online, and issuing 1,000 new state rental vouchers.
The state also issued 1,000 new mobile rental vouchers last fiscal year. "This is the most number of new state vouchers issued in a 12-month period since the 1980s," he said.
Boston remains one of the most expensive cities for renters and homeowners, according to the report, although some communities have tackled the problem by using zoning changes and incentives under the 40R law to develop more affordable housing, particularly near transit options, the report said. The law encourages communities to establish overlay zoning districts to promote housing production.
Housing sales in the state are projected to end 2013 at their highest level since 2005, and condominium sales are expected to reach levels not seen since 2008.
A sharp increase in the number of building permits also points to the market's turnaround, according to Barry Bluestone, from the Dukakis Center at Northeastern University. In the report, Bluestone estimated more than 11,000 units will be permitted in 2013, nearly double the construction permits pulled just two years ago. Single family housing grew at a slower rate, up 38 percent from 2011.
Bluestone said there's only a "remote" chance for another housing bubble, citing "the slow pace of economic recovery, the likelihood of a rise in mortgage rates, and perhaps most noteworthy, the desire of baby boomers to find smaller housing units, which will add to the inventory of single-family homes and put a brake on runaway prices."
Tim Warren, CEO of The Warren Group, called the most recent housing crash worse than the 1990s downturn, which lasted half as long as the more recent six-year downturn. Median home sale prices fell 12 percent in the 1990s, he said, and 20 percent during the more recent housing downtown. Warren said the housing market is in its second year of recovery, while the recovery in the 90s took six years.
Home prices are also rising significantly faster coming out of the more recent downturn, Warren said, speculating that many buyers in the current market may have sat out of the home-buying market during the recent housing crash. "I've been giving some thought as to why prices are rising rapidly this time and my conclusion really is pent-up demand and low inventory," he said.
[Colleen Quinn contributed reporting]
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