Josh Kraft takes reporters' questions after launching his mayoral campaign at the Prince Hall Grand Lodge in Dorchester on Feb. 4, 2025. Photo by Sam Doran | State House News Service
As Josh Kraft begins his campaign to unseat incumbent Boston Mayor Michelle Wu, the former nonprofit executive is spotlighting the struggle to accelerate housing development since Wu took office in late 2021.
Boston isn’t an outlier in the steady decline of cranes and construction equipment adding to its housing stock in recent years. Multifamily development has slumped nationally and in suburban Massachusetts alike concomitant with Wu’s mayoral term. But Kraft argues that Wu has intensified the macroeconomic headwinds by pushing through policies making projects even harder to finance under current market conditions, idling the development landscape and potential job sites.
“People are not working, people in that field, and we’ve got to do something. The current situation is not working, and I’m all about results,” Kraft said after his campaign kickoff event Feb. 4.
Kraft singled out Wu’s 2023 push to increase the affordable component of new housing developments to 20 percent, which applies to projects with at least seven units. Blaming it for the backlog of more than 20,000 approved units, he proposed a rollback to the 13-percent level for stalled projects, bringing it to the level in place since 2017.
The increase in market-rate units would boost projected rental income, potentially enabling developers to complete financing packages.
Kraft announced last week that he would roll back the minimum percentage of income-restricted units required in approved-but-stalled developments to 13 percent in a “one-time reset.” That was the minimum required from 2015 until the Wu administration pushed through an increase that took effect in 2024.
Real estate industry groups opposed the increase at the time, predicting it would make projects even harder to finance on top of construction cost and interest rate increases. In response, the Wu administration delayed its effective date until October of last year, but many projects filed in 2024 still sought to meet the new target.
Wu Defends Record
Kraft’s proposal includes an across-the-board change in income eligibility limits for such projects. One-third of affordable units would be set aside for people making 60 percent of area median income (AMI), one-third for renters at 90 percent of AMI and one-third at 120 percent of AMI.
Wu last fall responded to the growing backlog of unbuilt projects with creation of a $100 million fund to help developers of mixed-income housing complete financing for stalled projects.
Responding to Kraft’s proposal, Wu questioned its effectiveness, noting that many of the delayed projects were approved before the 2023 increase in the affordable percentage.
“We have to be really intentional about how we’re using city resources and city authority to get housing moving again,” Wu said during an appearance on GBH News’s “Boston Public Radio” show Wednesday. “That’s why we’re putting $110 million in our accelerator fund to get projects moving again, and holding firm in our affordability requirements.”
A campaign spokesperson later on Wednesday said Kraft’s proposal “would not be a difference maker for these projects […] Josh Kraft either doesn’t understand how housing is built in Boston or is knowingly misleading voters.”
The largest approved project yet to break ground, the 7,000-unit Suffolk Downs racetrack property redevelopment, was approved in 2020 with a 13 percent on-site affordability component and additional developer financial commitments including a $5 million neighborhood housing stabilization fund.
An “opt-in” rent control version and changes in affordability components of stalled projects are central to Boston mayoral challenger Josh Kraft’s real estate platform. iStock photo
Regional Housing Downtown Began in 2021
Real estate industry groups opposed Wu’s changes to the inclusionary development policy in 2023, warning it would make many projects unfeasible following a series of Federal Reserve interest rate hikes and rising construction costs.
And housing construction has declined sharply in the city. At the end of Wu’s first year in office, 5,670 housing units were under construction in Boston, according to real estate data firm CoStar. By the third quarter of 2024, the number had dropped to just 2,176 units, a 61 percent decrease.
Housing construction also dropped significantly across eastern Massachusetts and the nation as whole. There were more than 17,000 housing units under construction region-wide in late 2022, CoStar reported, compared with 12,860 in the third quarter of 2024 – a 25 percent decrease.
Nationally, construction activity dropped from 1.2 million housing units to below 700,000 units during the same period, CoStar National Director of Multifamily Analytics Jay Lybik said.
The failure of Silicon Valley Bank in 2023 prompted banks to tighten their lending standards, making multifamily lending more difficult to obtain, Lybik said. And equity investors pulled back from the multifamily development markets, seeking higher yields elsewhere and leaving housing developers scrambling for capital.
“In some cases, they are keeping it in multifamily, but just investing in existing deals rather than taking the risks associated with a new development,” Lybik said.
In Boston and some suburbs, competition from life science developers made it harder for housing developers to win bidding wars for sites in recent years. Now that lab vacancies have hit record highs, developers of approved lab projects in Boston, Somerville and Waltham are going back to local authorities seeking to switch to apartment construction.
“You’re not really competing with office and life science projects in the way you were before,” said Jeffrey Myers, director of research for brokerage Colliers in Boston. “More sites might pencil for multifamily than before. You still have to overcome the municipal zoning, but the math changes in favor of multifamily.”
New Incentives for Landlords and Renters
Kraft’s real estate platform offers a mixture of carrots and sticks designed to help the real estate industry shake off its recent slump. Along with the IDP changes, it includes a voluntary form of rent-restriction that would not require legislative approval, and includes tax breaks for landlords who participate.
Wu’s attempt to enact a rent stabilization law in 2023 failed to gain traction on Beacon Hill, needed to exempt Boston from a 1994 statewide ban on rent control.
The Kraft version would apply to all buildings regardless of age or size, but only if landlord opt into the program. In exchange, they would qualify for a 20 percent reduction in property taxes.
Kraft’s campaign also touted another selling point: creation of a city-maintained registry enabling renters to contact owners directly and bypass brokers. Gov. Maura Healey has supported calls for a statewide ban on broker fees paid by apartment-hunters.
Steve Adams
The “opt-in” rent stabilization plan would cap annual rent hikes at annual changes in the Consumer Price Index plus 5 percent, at a maximum of 10 percent per year, for 10 years in exchange for a 20 percent reduction in property taxes.
Rental households earning 200 percent or less of the area median income would be eligible to live in rent-controlled apartments.
The Boston City Council passed a bill Wednesday to set up a similar plan, introduced by East Boston Councilor Gabriella Coletta Zapata last month. The legislation would let Boston offer tax breaks to landlords who rent apartments to people making 80 percent or less of the area median income under a 2023 state law, a lower income limit than under Kraft’s proposal.
The Greater Boston Real Estate Board responded with cautious support for Kraft’s proposal.
“To increase housing supply and lower costs, Boston’s leaders must reduce government red tape. We remain firmly opposed to any policy that would stifle housing creation and disincentivize apartment upkeep and maintenance like the traditional rent control or rent stabilization legislative efforts. A voluntary rent cap with an owner’s tax break is a different approach,” CEO Greg Vasil said in a statement.
Doug Quattrochi, executive director of MassLandlords, dismissed rent control as a “left-wing populist idea” that has a history of failure. He suggested Boston emulate the city of Cambridge, which last week abolished its remaining single-family zoning districts in a strategy to encourage multifamily construction.
“Cambridge is solving the housing crisis,” Quattrochi said in an email. “Boston and all this rent control stuff is making it worse.”
