Housing Progress in Massachusetts

Jobs for Massachusetts

Barry BluestoneDean, School of Social Science, Urban Affairs, and Public PolicyDirector, Center for Urban and Regional PolicyNortheastern University

Boston Federal Reserve Bank

March 13, 2007

Massachusetts Employment Trends and Population Dynamics

U.S. - Employment - 1996-2006

125.7

129.6131.5

133.4

136.9 136.9 136.5 137.7139.3

141.4

144.6

115

120

125

130

135

140

145

150

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Massachusetts - Employment - 1996-2006

3105.5

3171.8

3220.5

3254.6

3283.03263.4

3234.4

3201.5 3199.5 3205.13230.6

3000

3050

3100

3150

3200

3250

3300

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Employment Growth (2000-2006) Massachusetts vs. U.S.

-30%

-20%

-10%

0%

10%

20%

30%C

onst

ruct

ion

Hig

h Te

chM

fg

Fina

ncia

lS

ervi

ces

Com

pute

rS

ervi

ces

Edu

catio

nS

ervi

ces

Hea

lth C

are

Per

cent

age

Cha

nge

Mass

U.S.

U.S. Bureau of Labor Statistics

Massachusetts Population

5737.0

6016.4

6349.1 6394.8 6411.6 6417.6 6407.4 6398.7

5000.0

5200.0

5400.0

5600.0

5800.0

6000.0

6200.0

6400.0

6600.0

1980 1990 2000 2001 2002 2003 2004 2005

Popu

latio

n (in

thou

sand

s)

U.S. Bureau of the Census

Massachusetts Net Migration (2000-2005)

33,292 33,347 31,785 29,041 26,515

-22,892

-39,506-48,514

-61,980 -60,053-70,000

-50,000

-30,000

-10,000

10,000

30,000

50,000

2000-2001 2001-2002 2002-2003 2003-2004 2004-2005

Foreign Immigration Internal Migration

U.S. Census Bureau

Population Change by Age Cohort (2000-2004)

-10%

-5%

0%

5%

10%

15%

20%

25%

Under 5 5 to 19 20-24 25-34 35-54 55-64 65+

Age Cohort

Per

cent

age

Cha

nge

Mass

U.S.

U.S. Bureau of the Census

Where did they go?

TX

CA

MT

AZ

ID

NV

NM

CO

IL

OR

UT

KS

WY

IA

SD

NE

MN

ND

FL

OK

WI

MO

AL

WA

GA

AR

LA

MI

IN

NY

PA

NC

MS

TN

KYVA

OH

SC

ME

WV

MI VTNH

MD

NJ

MA

CT

DE

RI

Net Migration* Betweeen Massachusetts and Competitor States1990-2002

*Thicker line represents more migration

State Net Migration from State

Florida -99,082 New Hampshire -78,201 California -23,978 Arizona -11,033 North Carolina -8,983 Washington -4,516

$169$159

$152 $146 $148 $150 $154$161

$168

$186

$210

$245

$273

$313

$343

$376

$165 $168

$100

$150

$200

$250

$300

$350

$400

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

(in

$th

ou

san

ds)

Greater Boston Median Single Family Home Price 1987-2006

Source: The Warren Group Publications

$169$159

$152 $146 $148 $150 $154$161 $168

$186

$210

$245

$273

$313

$343

$376

$395

$373

$165 $168

$100

$150

$200

$250

$300

$350

$400

(in

$th

ou

san

ds)

2005Class A Apartment Rents

$1

,95

3

$1

,82

5

$1

,74

5

$1

,68

6

$1

,67

7

$1

,63

2

$1

,57

9

$1

,52

6

$1

,51

7

$1

,46

6

$1

,43

9

$1

,32

5

$1

,31

6

$1

,24

1

$1

,15

5

$1

,11

1

$1

,04

3

$1

,01

8

$1

,01

2

$9

87

$0

$500

$1,000

$1,500

$2,000

$2,500

Source: Forbes Magazine

Calculations based on 900 Sq.Ft. Apartment

Annual Cost of Living: 4 Person Household

$30,000

$35,000

$40,000

$45,000

$50,000

$55,000

$60,000

$65,000

$70,000

1 2 3 4 5 6 7 8 9 10

Cost of Living Decile

De

cil

e A

ve

rag

e C

os

t o

f

Liv

ing

Boston$64,656

Source: Economic Policy Institute, “Family Budget Calculator, 2005”

Universe: 304 U.S. Metro Areas

Greater Boston Family Budget 4 Person Family with 2 Children

Housing Costs: 7th Highest MSA Child Care: 7th Highest MSA Health Care: 7th Highest MSA Personal Care: 6th Highest MSA Fed/State Tax: 2nd Highest MSA

Total Cost: 1st Highest MSA

Economic Policy Institute, Family Budget Calculator, 2005

Among 304 U.S. Metropolitan Areas

Top Decile: Metro Area Cost of Living

Boston $ 64,656Washington (D.C. portion) $ 61,440Nassau-Suffolk, NY $ 60,780 Stamford-Norwalk, CN $ 60,720 Lawrence (Mass. portion) $ 59,280 New York, NY $ 58,656 Barnstable-Yarmouth, MA $ 58,236 San Francisco, CA $ 57,624 Worcester (Mass. portion) $ 55,704Springfield, MA $ 55,320Minneapolis-St. Paul, MN $ 54,948 Nashua, NH $ 54,852 Santa Cruz-Watsonville, CA $ 53,808Oakland, CA $ 53,412 San Jose, CA $ 52,800 Pittsfield, MA $ 52,632 Rochester, MN $ 51,288

Monmouth-Ocean, NJ $ 50,736San Diego, CA $ 50,088Newark, NJ $ 49,992New Haven-Meriden, CN $ 49,848Honolulu, HI $ 49,824Philadelphia (Pa. portion) $

49,716Boulder-Longmont, CO $ 49,596Bridgeport, CN $ 49,272Manchester, NH $

49,152Santa Rosa, CA $ 48,924Albany-Schenectady-Troy, NY $ 48,900Hartford, CN $ 48,684Trenton, NJ $ 48,576Rochester, NY $ 48,540

Economic Policy Institute: Family Budget Calculator

Universe: 304 U.S. Metro Areas

A Tale of Two CitiesBasic Budget2 Parents, 2 Children

Boston

Monthly Housing $1,266Monthly Food $ 587Monthly Child Care $1,298Monthly Transportation $ 321Monthly Health Care $ 592Monthly Other Necessity $ 500Monthly Taxes $ 824Monthly Total $5,388

Annual Total $64,656

Raleigh-Durham-Chapel Hill

Monthly Housing $ 779Monthly Food $ 587Monthly Child Care $ 866Monthly Transportation $ 358Monthly Health Care $ 368Monthly Other Necessity $ 369Monthly Taxes $ 350Monthly Total $3,677

Annual Total $44,124

A Tale of Two Cities

Source: Economic Policy Institute, “Family Budget Calculator, 2005”

Regional Average Monthly Housing Costs (2004)

$892.60

$708.46 $692.82$617.23 $616.29 $566.14 $583.67

$720.00

$914.63

-$100

$100

$300

$500

$700

$900

$1,100

$1,300

Hou

sing

Cos

ts

Boston ($1,266)

Source: Economic Policy Institute, “Family Budget Calculator, 2005”

The Impact of Housing Prices and Cost of Living on the Massachusetts Economy

Impact on EmploymentImpact on Net Internal Migration

Employment Growth (%) (2000-2004)

-1.00%

-0.50%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

1 2 3 4 5 6 7 8 9 10

Housing Price Decile

Per

cent

Cha

nge

Low Price High Price

Economic Policy Institute, “Family Budget Calculator, 2005”; U.S. Bureau of Labor Statistics

Universe: 245 U.S. Metro Areas

0.95%

2.91%

2.29%

0.86%

1.53%

0.68%

-0.68%

0.12%

-0.62%

1.49%

Employment Growth (%) (2000-2004)

-6.00%

-5.00%

-4.00%

-3.00%

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

4.00%

1 2 3 4 5 6 7 8 9 10

Housing Price Decile

Per

cent

Cha

nge

Boston MSA (-4.9%)

Economic Policy Institute, “Family Budget Calculator, 2005”; U.S. Bureau of Labor Statistics

Universe: 245 U.S. Metro Areas

Employment Growth (%) (2000-2004)

-1%

0%

1%

2%

3%

1 2 3 4 5 6 7 8 9 10

Cost of Living Decile

Per

cent

Cha

nge

Low Cost High Cost

Economic Policy Institute, “Family Budget Calculator, 2005”; U.S. Bureau of Labor Statistics

-0.21%

0.93%

-0.02%

0.84%1.06%

0.50%

1.09%

1.98%

0.62%

2.53%

Universe: 245 U.S. Metro Areas

Economic Policy Institute, “Family Budget Calculator, 2005”; U.S. Bureau of the Census

Internal Net Migration (%) (2000-2004)

-0.8

1%

-1.0

6%

0.1

8%

0.2

7%

0.9

3%

0.3

6%

2.7

2%

3.0

5%

2.4

5%

-2.2

5%

-6.00%

-4.00%

-2.00%

0.00%

2.00%

4.00%

1 2 3 4 5 6 7 8 9 10

Housing Cost Decile

Decil

e P

erc

en

t

Boston MSA (-5.2%)

Universe: 304 U.S. Metro Areas

Internal Net Migration (2000-2004)

0.3

5%

-0.0

3%

0.5

9%

0.4

8% 1.2

3% 1.9

5%

1.5

2%

1.5

6%

0.1

1%

-2.1

2%

-4.00%

-3.00%

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

1 2 3 4 5 6 7 8 9 10

Cost of Living Decile

Decil

e P

erc

en

t

Economic Policy Institute, “Family Budget Calculator, 2005”; U.S. Bureau of the Census

Universe: 304 U.S. Metro Areas

The Massachusetts Housing Pipeline

A Good Start at Permitting New Housing

Housing Unit Pipeline in Greater Boston

Source: U.S. Census; pre-1980 compiled by BRA Research Department

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,00068

70

72

74

76

78

80

82

84

86

88

90

92

94

96

98

00

02

04

5+ units 1-4 units

2003-2005

1993-2002

No. of Communities

Approved or Estimated 40R Zoned

Units

Estimated 40R

Affordable Units

Eligible 40R Incentive Payment

Potential 40R

Density Bonus

Payment

1 (Approved) 10 2,881 570 $2.9 M $7.8 M

2 (Filed with DHCD)

8 4,628 937 $3.9 M $13.8 M

3 (PDF grant funding)

6 N/A N/A N/A N/A

4 (under local consideration)

18 N/A N/A N/A N/A

42 7,509(minimum)

1,607(minimum

)

$7.1Million

$22.3Million

The Smart Growth 40R Housing Pipeline

Lagging “Starter” Homes

Year Total Units Permitted

Units in Single Family

Structures

Single Family

Units as % of Total

Units in 2-4 Unit

Structures

Units in 5+ Unit

Structures

1998 10,846 8,639 79.7% 574 1,633

1999 10,662 7,775 72.9% 746 2,141

2000 10,342 7,102 68.7% 701 2,539

2001 9,701 6,313 65.1% 686 2,702

2002 9,520 6,408 67.3% 764 2,348

2003 12,121 6,020 49.7% 1,093 5,003

2004 13,556 7,000 51.6% 994 5,562

2005 15,945 7,270 45.6 % 1,015 7,660

Housing Production Up in Massachusetts… but Still a Lingering Problem for Young Families

New “Starter” Home Proposal Proposing new legislation to encourage

voluntary local zoning for modest priced “starter” homes 1,700 s.f./3 Bedroom 5-8 units per acre Affordable units at 150% of AMI State pays 100% of local school costs State local aid bonuses to encourage re-zoning

and permitting Higher bonuses than Chapter 40R Payments

Continue to encourage municipalities to adopt Chapter 40R

Work with Governor and Legislature to assure permanent funding for 40R and 40S

Develop new legislative program for “starter” homes

Develop new program for low income family rental housing using innovative financing mechanisms

CHTF: 2007 Agenda