Policy Brief on Affordable Housing solutions for Greater Boston Area

Summary

The Greater Boston Area is grappling with an escalating affordable housing crisis. Rapid population growth and limited new housing unit construction have pushed the market to high ownership prices and hence high rents, making housing Greater Boston Area one of the highest rents in the country.

Context and Importance of the Problem

1. Affordability Crisis: Boston is one of the top cities in the US based on Rent, making housing unaffordable.
2. Market Failure. The market caters to high-end renters, sidelining lower income households.
3. Local Government Inaction: Zoning laws and few building permits limit housing supply increasing rent.
4. Affordable Housing not meeting demand: Affordable Housing Subsidy are grossly oversubscribed.
5. Economic Impact: Housing costs may push out essential low-wage workers, affecting local industries.
6. Socio-Cultural Impact: High rents lead to gentrification of communities as residents are priced out.

Analysis and Key Findings

Affordable housing is public good that improves local economy and provides social security. New projects build legally required income restricted units, but do not cater primarily to the lower income market. Government subsidies and large reconstruction projects are needed to meet the demand at scale. Secondly, Local Governments are not willing to issue needed building permits without concessions for local development to deal with higher density. Lastly, streamlining existing housing application process is insufficient due to sheer lack of vacancy. The current policies fail to meet construction demand (figure).

Potential Solutions considered:

1. Subsidizing construction can make affordable housing construction more attractive for developers.
2. Enforcing higher percentage of affordable unit construction for all new projects.
3. Promoting mixed use zoning can spur new development on existing commercial properties.
4. Purchasing old blocks for redevelopment can also provide opportunities for affordable housing.
5. Differential Mortgage or Property Tax credits for own living vs rental properties to reduce prices.
6. Improve affordable housing application process to get higher matches by providing single click discovery and applications streamlining all affordable housing subsidies (Federal, state, and local).
7. Support market solutions for affordable housing by opening discovery and auctions to realtors.

Stakeholders

Low-income households strongly support policy action to increase affordable housing availability.
Homeowners oppose local affordable housing projects, as it can lead to a drop in house values.
Local Business support affordable housing to reduce demand for high income.
Local Governments tend to oppose new construction due to strong push from homeowners but can be incentivized.

Policy Recommendation

1. Subsidize construction of affordable housing by open bidding:
   • Auction building subsidies by open bidding system to developers for affordable housing.
   • Simplify local building codes to support national bid.
   • Ensure timely completion of projects using retraction clauses for handling failures.
   • Open bidding for up-to 1.5X of production goals by Metro Mayors Council.
2. Provide development funds for Local governments per unit of affordable housing permits allotted.
   • Provide redevelopment funds to meet infrastructure demands for population increase.
   • Provide funding for up-to 1.5X of production goals by Metro Mayors Council.
   • Recommend zoning to support redevelopment.
   • Provide loans for purchasing blocks to redevelop at scale.

Risks:

Cost Overruns: The current proposal recommends large spending in the short term for growth in local businesses that can be recouped at the state level.
Local Opposition: Engaging with local governments and communities early in the decision-making process is key for ensuring transparency and collaboration.
Political Opposition: Strong bipartisan support is needed to instill confidence in continuity of process.

Call to Action:

Governor Healey has the unique leverage to address this crisis head-on by proving a market driven approach can work in solving the affordable housing crisis. The Executive of the Commonwealth of Massachusetts can once again lead the Coalition of Governors across the nation to solve the complex problems the Massachusetts way (like Affordable Healthcare).

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References

Link to analysis: https://shahzorkhan.wordpress.com/2023/10/16/policy-analysis-on-affordable-housing-solutions-for-greater-boston-area/

Boston Foundation. (2022). Housing Report Card. Boston: The Boston Foundation.

DAILYMAIL.COM, R. R. (2023, January 24). Record-high number of people are now spending more than 30% of their income on rent. Retrieved from https://www.dailymail.co.uk/: https://www.dailymail.co.uk/news/article-11670831/Record-high-number-people-spending-30-income-rent.html

Harvard JCHS. (2023). RENTER COST BURDENS REACH RECORD LEVELS. Harvard Joint Center for Housing Studies.

Khalid, A. (2018, Nov 02). How Massachusetts’ Republican Governor Has Remained So Resilient In A Blue State. (A. T. Considered, Producer) Retrieved from https://www.npr.org/: https://www.npr.org/2018/11/02/663655451/how-massachusetts-republican-governor-has-remained-so-resilient-in-a-blue-state

National Low Income Housing Coalition. (2022). Out of Reach, The High Cost of Housing. National Low Income Housing Coalition.

Reilly, A. (2022, Nov 9). What to expect when you’re expecting Maura Healey. Retrieved from https://www.wgbh.org/: https://www.wgbh.org/news/politics/2022-11-09/what-to-expect-when-youre-expecting-maura-healey

Urban Institute, NHC. (2016, July). Cost of Affordable Housing. Retrieved from Urban.Org: https://apps.urban.org/features/cost-of-affordable-housing/