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Massachusetts Housing Market
Assessmentprepared for the
Massachusetts Department of Housing and Community Development by
UMass Donahue Institute Director, Michael D. Goodman
Presented by:Tina Brooks
Undersecretary for Housing and Community DevelopmentNovember 2008
Department of Housing and Community Development 2
MA Housing Market Assessment
1st Statewide housing study in over 20 years Uses MOBD & RPA regions Organization
Population trends Employment trends Housing Supply & Demand Housing Affordability Housing Safety Net
Department of Housing and Community Development 3
Regions
Department of Housing and Community Development 4
Context
Conducted during a period of significant volatility National economic recession Declining housing market Increasing energy costs Decreasing consumer confidence
Ultimate impact??
Department of Housing and Community Development 5
Cape and Islands Region Profile 2000-2006, Population Gain of 1.0%
Nantucket (8.9%) and the Vineyard (12.6% for Chilmark, 6.6% for West Tisbury) grew substantially.
The Upper Cape experienced the greatest growth on the mainland, with Mashpee growing 10.1%, while the Mid-Cape experienced the greatest loss, with Yarmouth and Dennis both losing 2.4% of their population.
79% Homeownership Rate, substantially higher than MA average
3.3% Regional Employment Share Behind all regions except the Berkshires. 4.4% employment gain from 2001-2007
The region is projected to have housing supply surpluses at least through 2012, but there is a projected shortage of multi-family units.
14% Home Price decline Sept. 2005-May 2008, slightly larger than the state average.
Department of Housing and Community Development 6
Population 2000-2007
1.3% growth statewide Declines in youth/pivotal for housing demand Increases among 50-64s
Household growth flat Increase in 1 & 2 person households Decrease in 3+ person households Little change across age groups other than
aging boomers
Department of Housing and Community Development 7
Employment More than 50% of state’s covered employment is in Greater
Boston 41% of employed workforce live there Commuting a necessity, not a choice
Top Employment Centers & covered employment share NE (Lowell, Andover) 12.8% SE (Brockton, New Bedford, Fall River) 12.7% Central (Worcester) 9.8% Pioneer Valley (Springfield) 8.9% Cape & Berkshire 5.3%
1.5% decline statewide 2001-2007(50,000 jobs) Only SE, Cape and Central added jobs
SE grew 11,295 jobs (2.9%) Cape grew 4,400 jobs (4.4%) Central grew 1070 jobs (.3%)
Department of Housing and Community Development 8
Regional Incomes Continued widening in regional income disparity since 1979 Eastern MA becoming a super region (more expensive) Gateway Cities still job centers for the Commonwealth – challenge
and opportunity Regional Household Median Incomes, 2006
First quintile Second quintile Third quintile Fourth quintile Fifth quintile
Berkshire $9,930 $25,323 $47,513 $73,552 $117,158
Cape& Islands $14,710 $34,533 $54,639 $81,443 $140,671
Central $12,493 $33,624 $56,065 $84,795 $136,608
Greater Boston $11,680 $36,564 $63,045 $99,536 $178,627
Northeast $13,450 $39,088 $66,019 $101,502 $164,547
Pioneer Valley $10,402 $26,722 $46,721 $72,117 $116,803
Southeast $12,391 $33,517 $57,284 $85,531 $137,116
Department of Housing and Community Development 9
EOHED Responses
Lower environmental barriers investment Development “readiness”: expedited permitting, zoning
reform, Growth Districts, Community Assistance Unit Broadband
Elevate sectors with best prospects for living wage (and better job growth) Life Sciences, Clean Energy, Creative Economy, IT and
specialized Manufacturing Assure housing support for employer location decisions
Employer-Assisted Housing (EAH), preferred mortgage products, Preservation
Expand support to regional economies outside Greater Boston region Gateway Plus
Department of Housing and Community Development 10
Community Development Physical Development
Encourage communities to approach projects in a strategic manner to deliver benefits to the overall community
Encourage Smart Growth and Sustainable Development principles
Economic Development Help communities make informed decisions about a project’s
short & long term consequences Help communities initiate and generate their own solutions to
local development problems
Social Development Shift from traditional approach of serving families/individuals in
poverty to an asset building strategy that breaks the cycle of poverty
Department of Housing and Community Development 11
Asset DevelopmentBefore Workforce Development Access to Benefits Financial Literacy
IncomeWage 19,008$ 25,344$ 25,344$ 25,344$ Child Support 2,436$ 2,436$ 2,436$ 2,436$ Interest Income from Savings -$ -$ -$ 23$ Total Income 21,444$ 27,780$ 27,780$ 27,803$ ExpensesHousing/Utilities 8,808$ 8,808$ 7,603$ 7,603$ Child Care 8,988$ 8,988$ 5,842$ 5,842$ Food 4,752$ 4,752$ 4,752$ 4,752$ Transportation 3,444$ 3,444$ 3,444$ 3,444$ Health Care 3,108$ 3,108$ 1,942$ 1,942$ Miscellaneous 2,880$ 2,880$ 2,880$ 2,880$ Total Household Expenses 31,980$ 31,980$ 26,463$ 26,463$ Check-cashing 380$ 507$ 507$ 60$ Furniture Finance Charges 1,809$ 1,809$ 1,809$ 70$ Emergency Loans (Payday) 596$ 596$ 596$ 85$ Total Finance Charges 2,785$ 2,912$ 2,912$ 215$ Earned Income Tax Credit (518)$ (518)$ Child Care Tax Credit (960)$ (960)$ Child Tax Credit (2,000)$ (2,000)$ Total Expenses 34,765$ 34,892$ 25,897$ 23,200$ Net Income (13,321)$ (7,112)$ 1,883$ 4,603$
Department of Housing and Community Development 12
Housing Thru early 80’s MA mirrored the nation
Highest national rate of home appreciation since that time
Since 2005 only 9 other states exceeded MA - led by FL, CA and NV
Northeast and Southeast regions were first to recover from early ’90s recession after Boston
Department of Housing and Community Development 13
Rental Housing – Priority Need for Young Workers 54% of MA tenants live in 1-4 family properties
Half of the rest in subsidized housing (including public housing)
State produced 75% of the 200,000 units needed between 1990-2000 Lack of production resulted in 70% rent increase ’94-01
Dramatic rent increases in eastern MA ’94-01 Increasing renter households where jobs are Loss of units to condo conversions Shortfalls in production since 1990
Department of Housing and Community Development 14
Response to Production Production increase during 2004 and 2005
New growth and prior shortfall = 104,000 units needed between 2000-2006. Net gain was 87,000.
Production focus Mod priced condos Age-restricted housing High-end rentals
Many Condos hit market as rentals & added to supply in 2006
Market result Vacancy 5-6%; 2-3% annual rent increases
Department of Housing and Community Development 15
2006 Massachusetts Market High Rent Market
4th Highest Statewide Median Rent in 2006 @ $933/mo. Only CA,NJ,& MD higher National median was $763
Low Barriers to Homeownership Low Interest Rates Flexible underwriting New/subprime mortgage products
Buyers subsequently hurt: Sale price decline 12.2% (Sept ’05 peak and May ’08) All property types affected: single family, Condo, 2-4 unit
multi-family No Massachusetts glut of unsold inventory compared to US
Department of Housing and Community Development 16
Housing Affordability Between 2000 and 2005/6
MA household incomes stagnant Housing prices rose significantly Recent price declines offset by rising utility costs and property taxes
Statewide Household Median Income (in 2006 $)
First quintile
Second quintile
Third quintile
Fourth quintile
Fifth quintile
1979 $13,487 $33,374 $53,977 $76,546 $120,450
1989 $13,824 $38,467 $62,869 $91,075 $145,278
1999 $15,085 $38,409 $63,634 $96,212 $165,043
2006 $12,188 $34,464 $58,909 $91,319 $154,890Source: US Bureau of the
Census, PUMS
Department of Housing and Community Development 17
Looking Forward… Produce housing in anticipation of job growth Support local advance preplanning work – Housing Production Plans, permits, zoning changes Match housing production to housing needs – Production Plan Asset Development Commission targeting self-sufficiency