Transcript Massachusetts Housing Market Report

Massachusetts Housing
Market Assessment
prepared 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 Development
November 2008
MA Housing Market Assessment
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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
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Regions
Department of Housing and Community Development
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Context
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Conducted during a period of significant
volatility
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National economic recession
Declining housing market
Increasing energy costs
Decreasing consumer confidence
Ultimate impact??
Department of Housing and Community Development
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Cape and Islands Region Profile
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2000-2006, Population Gain of 1.0%
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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
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3.3% Regional Employment Share
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Behind all regions except the Berkshires.
4.4% employment gain from 2001-2007
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The region is projected to have housing supply surpluses at least through
2012, but there is a projected shortage of multi-family units.
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14% Home Price decline Sept. 2005-May 2008, slightly larger than the
state average.
Department of Housing and Community Development
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Population 2000-2007

1.3% growth statewide
 Declines in youth/pivotal for housing demand
 Increases among 50-64s
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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
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Employment
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More than 50% of state’s covered employment is in Greater
Boston
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Top Employment Centers & covered employment share
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41% of employed workforce live there
Commuting a necessity, not a choice
NE (Lowell, Andover)
SE (Brockton, New Bedford, Fall River)
Central (Worcester)
Pioneer Valley (Springfield)
Cape & Berkshire
12.8%
12.7%
9.8%
8.9%
5.3%
1.5% decline statewide 2001-2007(50,000 jobs)
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Only SE, Cape and Central added jobs
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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
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Regional Incomes
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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
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EOHED Responses
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Lower environmental barriers investment
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Elevate sectors with best prospects for living wage (and
better job growth)
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Life Sciences, Clean Energy, Creative Economy, IT and
specialized Manufacturing
Assure housing support for employer location decisions
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Development “readiness”: expedited permitting, zoning
reform, Growth Districts, Community Assistance Unit
Broadband
Employer-Assisted Housing (EAH), preferred mortgage
products, Preservation
Expand support to regional economies outside Greater
Boston region
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Gateway Plus
Department of Housing and Community Development
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Community Development
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Physical Development
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Economic Development
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Encourage communities to approach projects in a strategic
manner to deliver benefits to the overall community
Encourage Smart Growth and Sustainable Development
principles
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
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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
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Asset Development
Before
Income
Wage
Child Support
Interest Income from Savings
Total Income
Expenses
Housing/Utilities
Child Care
Food
Transportation
Health Care
Miscellaneous
Total Household Expenses
Check-cashing
Furniture Finance Charges
Emergency Loans (Payday)
Total Finance Charges
Earned Income Tax Credit
Child Care Tax Credit
Child Tax Credit
Total Expenses
Net Income
Workforce Development
Access to Benefits Financial Literacy
$
$
$
$
$
$
$
$
19,008
2,436
21,444
$
$
$
$
25,344
2,436
27,780
$
$
$
$
$
$
$
$
$
$
$
8,808
8,988
4,752
3,444
3,108
2,880
31,980
380
1,809
596
2,785
$
$
$
$
$
$
$
$
$
$
$
8,808
8,988
4,752
3,444
3,108
2,880
31,980
507
1,809
596
2,912
$
$
34,765 $
(13,321) $
Department of Housing and Community Development
$
$
$
$
$
$
$
$
$
$
$
$
$
$
34,892 $
(7,112) $
25,344
2,436
27,780
$
$
$
$
25,344
2,436
23
27,803
7,603
5,842
4,752
3,444
1,942
2,880
26,463
507
1,809
596
2,912
(518)
(960)
(2,000)
25,897
1,883
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
7,603
5,842
4,752
3,444
1,942
2,880
26,463
60
70
85
215
(518)
(960)
(2,000)
23,200
4,603
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Housing
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Thru early 80’s MA mirrored the nation
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Highest national rate of home appreciation since
that time
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Since 2005 only 9 other states exceeded MA - led
by FL, CA and NV
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Northeast and Southeast regions were first to
recover from early ’90s recession after Boston
Department of Housing and Community Development
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Rental Housing – Priority Need for
Young Workers
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54% of MA tenants live in 1-4 family properties
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State produced 75% of the 200,000 units needed
between 1990-2000
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Half of the rest in subsidized housing (including public
housing)
Lack of production resulted in 70% rent increase ’94-01
Dramatic rent increases in eastern MA ’94-01
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Increasing renter households where jobs are
Loss of units to condo conversions
Shortfalls in production since 1990
Department of Housing and Community Development
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Response to Production
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Production increase during 2004 and 2005
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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
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Market result
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Vacancy 5-6%; 2-3% annual rent increases
Department of Housing and Community Development
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2006 Massachusetts Market
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High Rent Market
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Low Barriers to Homeownership
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4th Highest Statewide Median Rent in 2006 @ $933/mo.
Only CA,NJ,& MD higher
National median was $763
Low Interest Rates
Flexible underwriting
New/subprime mortgage products
Buyers subsequently hurt:
Sale price decline 12.2% (Sept ’05 peak and May ’08)
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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
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Housing Affordability
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Between 2000 and 2005/6
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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
$154,890
Source:
US Bureau of the
Census, PUMS
Department of Housing and Community Development
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Looking Forward…
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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
Department of Housing and Community Development
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