Susan Gittelman
Housing is in short supply in the Greater Boston area, and what is built can be prohibitively expensive.
The recently released annual housing study from Northeastern University’s Center for Urban and Regional Policy, “The Greater Boston Housing Report Card 2015: The Housing Cost Conundrum,” notes that in the Greater Boston area, a small family-sized, 1,600-square-foot home costs more than $438,000 to build today.
That confirms what we’ve suspected – given the high cost of producing housing and absent significant changes in zoning, we cannot build our way out of the growing gap between our housing inventory and the growing demand in our region, particularly for middle-income households.
The study also highlights that the nature of housing demand in our region has created great stress on what have been the traditional point-of-entry housing types, like the modest Cape Cod-style house and the iconic “triple deckers” in Greater Boston. The latter has seen astronomical sale price increases – a 95 percent increase in the span of just six years – according to the study.
The very strength of our economic future is at risk when our skilled and talented young workforce has to move elsewhere to put down roots for themselves and their families.
The most obvious culprit is the high cost of land. Beyond that, prohibitive zoning rules and difficult permitting processes make it difficult to build housing at any scale.
One lesser-known issue, particularly relevant in suburban and semi-rural areas but present in certain aging sections of cities, too, is infrastructure and site costs. Infrastructure expenses include sewers, roads and utilities that new housing developments require.
“Site costs,” which include installing infrastructure, “have gone up by 83 percent, nearly nine times faster than inflation,” since the mid-2000s, the report found. Overall, “suburban development costs have increased two and one half times as fast as urban costs,” the report said, and site costs are a big factor. Construction costs were high in the earlier period and remain high. Developers’ fees on a per-square-foot basis have actually decreased.
For some of the cost-drivers – value of land, for example – there are few or essentially no solutions. But for things like high and rising infrastructure costs, there is at least one solution that has already found traction.
It’s called MassWorks.
Early in the administration of Gov. Deval Patrick, six separate programs whose money could be used for things like roads and utilities were united under the MassWorks Infrastructure Program. The idea was to coordinate the programs into MassWorks and provide one-stop shopping to communities applying for money to build infrastructure necessary to entice developers to undertake commercial and residential developments that would enhance the economy.
Flexibility An Asset
Greg Bialecki, then secretary of the Executive Office of Housing and Economic Development, oversaw the program and said it worked well; the money available increased from year to year, and the Patrick administration responded to the housing need by making production of middle-class housing a priority. In 2014, 31 projects shared $66.8 million in MassWorks money, many including multifamily housing.
Bialecki’s successor, Jay Ash, said in September that the Baker administration favors the program and will not only continue to make grants, but actually increase them. Just recently the state announced $86 million of awards to 49 communities, many of which included infrastructure to support new housing development in communities including East Boston, Chicopee, Dracut, Fitchburg, Great Barrington, Haverhill, Holyoke, Hamilton, Malden and Mansfield.
Many agree the flexibility of MassWorks is an asset, and Ash said the administration would use the program to accompany rezoning or other local changes even if they aren’t immediately tied to a new housing development. That was the case in the recent award to Marlborough, which rezoned its town center for housing.
The program is competitive and challenging decisions are made about where to spend the money. But if public dollars for infrastructure can unlock private investment for more and more affordable homes, that’s success. In fact, legislation has been proposed that would ensure MassWorks prioritizes housing in the awards process – over, say, a new block of only commercial shops or a factory.
MassWorks serves as an excellent example of how public funding can be used to clear hurdles facing housing development across the commonwealth. It has emerged as an important factor in the complicated arithmetic of producing the housing that we so desperately need.
