The Housing Report Card 2017: The Dickens, You Say

By Bob Ruzzo

“It was the best of times; it was the worst of times...”

Charles Dickens, A Tale of Two Cities

The Greater Boston Housing Report Card is an annual “must-see” housing event providing, as it does, an annual scheduled opportunity to step back from the project centric trees and observe the overall state of the larger housing forest.  The most recent Report Card marks the 15^th time that the Boston Foundation and Northeastern University have collaborated on this effort, with valuable sales and ownership information being provided by the Warren Group. Even if one on occasion quarrels with or has a quibble about some of the conclusions reached in the Report Card, this report is a true civic gem and these organizations are to be congratulated and thanked for their continuing diligence (and stamina) on this issue.

As the Dickensian reference suggests, we in the Massachusetts housing sector have much to be thankful for amidst the abundant challenges that confront us.  First, the Massachusetts economy continues to chug along.  As noted in the Report Card, “real inflation-adjusted gross domestic product has increased so fast in the Commonwealth that in 2016, Massachusetts ranked first in the nation in per capita output – up from sixth place in 2015.” Non-farm seasonally adjusted unemployment has reached an all-time high.

The benefits of this economic strength continued to be skewed in their distribution, and the extremely high cost of housing in the heart of the Greater Boston economic engine complicates the ability to house badly needed workers and becomes a factor in corporate decision-making about expansion and re-location; high-class problems, to be sure, but vexing hurdles nonetheless.

Obtaining and reading the Report Card itself is highly recommended, and here are some initial tidbits to add to your own reflections:

1. Higher Priced Housing Is On The Move and coming soon to a working-class community near you.  Continued price increases in the urban core (Boston, Cambridge and Somerville) are not surprising, but the uptick in housing costs in a number of locations further out from the core is in some cases, startling.  Over the last two years, the median home price in Lawrence is up 14.2%, higher, in percentage terms, than either Brookline or Newton.  Granted, we are dealing with significantly different starting points, but this trend carries with it long-term implications for our multi-modal transportation network.

2. Boston Continues To Lead The Way.  In terms of Housing Permits issued in the five-county Greater Boston Region, the city proper, which “makes up 0.62% of the total land mass of the region and… 9.4% of the region’s population”, was responsible for 29% of the building permits issued in the region in 2016.  Other communities in the region have not kept up, on a proportionate basis, with Boston’s increased housing production.

Thus, we come upon the annual quibble: while the Report Card was subtitled “Ideas from the Urban Core,” it reads somewhat more like a “Plan for the Urban Future,” recommending a 10 step plan to develop a substantial number of “21st Century Villages,” a laudable goal that does carry with it a number of statewide policy points.

One suggestion: a straightforward “idea from the urban core” may be expressed in two simple words: Boylston Street.

Fifteen years ago, the Fenway stretch of Boylston Street was an unloved asphalt mix of muffler shops, fast food options, and deteriorating commercial space.  A committed group of residents realized that with this as the base condition, and given the inherent advantages of the area-a number of large, fixed institutional resources (including, but by no means limited to Longwood Medical Area), it was possible to do much better.  While the high-rise (and high cost) approach of Fenway’s Boylston Street is not replicable (nor desirable) everywhere, it demonstrates the tremendous “recycling” opportunities that exist in “fully built out” communities throughout the Commonwealth.  Customizing the approach (and not necessarily the result) to individual communities is a path we should continue to follow.

3. The Power of Inclusionary Zoning.  Folks who were unable to attend the rollout session at the Boston Foundation missed this one, which was presented by Sheila Dillon, the Chief of Housing & Director of the Department of Neighborhood Development in the post-presentation discussion.  She provided statistics indicating that over the last year, the number of affordable units produced through inclusionary zoning actually outstripped the number of affordable housing units added through more traditional financing techniques such as tax credits, tax-exempt debt and “soft loans.”  That’s a true testament to the power of increased density in a highly desirable market and a topic well worth further discussion.  (And it wins the nomination for this year’s “most underplayed issue” to emerge from the Report Card process).

4. Speed Helps.  A discussion of increased production within the city of Boston would not be complete without noting the dramatic reduction in the time it takes to obtain a building permit.  Average wait times for a single family home permit were shaved from 472 days in 2014 to 74 days in 2016.  The average wait time from application to permit for a Multi-family (5 or more units) development permit was also trimmed from 425 days in 2014 to 119 days in 2016.

5. Homeownership Rates Continue to Fall.  Last year’s nominee for the most underplayed issue.  As indicated in this space last year (“Don’t Look Now, But the Homeownership Rate Keeps Falling”), the drop in homeownership among the upper reaches of “prime age households” (aged 25 to 44) is particularly noteworthy.  To its credit, MassHousing has taken the first steps in a pilot program to try to identify potential new homeowners from the ranks of renters in its affordable housing portfolio.

That’s all that time allows. Pick up a copy of the Greater Boston Housing Report Card and peruse it yourself. It is well worth the effort.

“The Housing Watch” is a regular column from Bob Ruzzo,  senior counsel in the Boston office of Holland & Knight LLP.  He possesses a wealth of public, quasi-public and private sector experience in affordable housing, transportation, real estate, transit-oriented development, public private partnerships, land use planning and environmental impact analysis. Bob is also a former general counsel of both the Massachusetts Turnpike Authority and the Massachusetts Housing Finance Agency; he also served as chief real estate officer for the turnpike and as deputy director of MassHousing.”  Bob can be contacted by email at robert.ruzzo@hklaw.com.