A new housing analysis reveals Gateway Cities on different paths: those leaping ahead to surpass their production targets, while others, particularly in Western Massachusetts, failing to launch.
The variable results may indicate that zoning and permitting reforms work where the private real estate market works, while indicating deeper challenges in other regions where the state’s impact, even with its flurry of policies and $5 billion Affordable Homes Act, has not been felt.
Over the last few weeks, my colleagues at MassINC’s Policy Center have released the first three chapters of the 2025 Gateway Cities Housing Monitor, which relate to housing production, affordability and conditions for growth.
The good news: Gateway Cities demonstrated remarkable housing production in 2023, quadrupling their output to 7,300 new units, up from 1,800 in 2022 and 2,300 in 2021. This high-water mark actually met our recommended goal for the year.
Housing production then slipped to 4,700 units in 2024, about 3,000 units behind MassINC’s estimate for what is needed to bring the housing market into balance.
The Bifurcation Deepens
Within these collective numbers, individual communities and regions stand out.
Most of the metro Gateway Cities, which 10 years ago found themselves touched by the aura of the hot Boston market, continue to produce housing at a steady clip and show 2 percent to 5 percent growth. Malden and Chelsea were the two outliers, resulting perhaps from local efforts to slow down market-rate housing.
The Merrimack Valley (Lawrence grew the fastest of any Gateway City) and Barnstable rounded out the other high-growth communities. Western Massachusetts showed little or no growth.
Although Gateway Cities still outpaced their suburbs in housing production relative to size, the suburbs produced more absolute housing units for their regions – about 10,500 new homes in 2023 (which also quadrupled their previous year’s production) and 6800 in 2024.
Cape Cod, Greater Worcester and Merrimack Valley suburbs accounted for nearly 60 percent of these suburban units, while the Western Massachusetts suburbs grew more quickly than their cities.
Perhaps most surprisingly, Gateway City suburbs produced over 1,300 deed-restricted affordable apartments compared to 525 in their cities, although the cities still have twice as many of these units overall.
If international arrivals – trending downwards thanks to federal policy – are not replaced by internal migration, Gateway Cities may face a low-growth scenario in the coming years where less housing production would be needed to normalize vacancy rates and reduce upward pressure on prices.
More Multifamily, Less ‘Missing Middle’
One of the report’s most surprising findings is that only 5 percent of housing production in Gateway Cities came from buildings with between two and eight units. That suggests that although Gateway Cities boast many of the double- and triple-deckers in the state, they could do much more to allow this kind of housing by right.
The permitting pipeline suggests that up to 80 percent of all new units will be part of multifamily projects. The 106 multifamily projects permitted in 2024 are more than double the annual average from 2012-2017.
Meanwhile, the fabled “mill redevelopment” era may be passing. Between 2012 and 2022, 43 percent of projects in Gateway Cities were adaptive reuse, but that dropped to just 16 percent in 2023-2024.
Home purchase prices remain historically high, and just 20 percent of Gateway City households can afford the typical home in their community. On the positive side, values increased just 1 percent last year after a decade of 5 percent annual increases which doubled prices.
Rents generally accelerated faster in the state’s lower-cost markets while remaining stable in more expensive cities near Boston. It is not clear whether that is because those communities have been building more, or simply that rents have reached the maximum that the market will bear. One result is that the rental gap between the lowest-cost and highest-cost Gateway Cities shrank.
Gateway Cities continue to provide about 70 percent of the “naturally-occurring” affordable housing in the state.
A Short-Lived Surge?
The surge in housing production in 2023 which began to tail off in 2024 coincided with unprecedented federal and state funding infusions, including American Rescue Plan Act grants, expanded Housing Development Incentive Program (HDIP) funding, and increased state bond allocations. The critical question facing the industry is whether this represents a temporary spike tied to one-time resources. Most troubling, the housing production surge completely bypassed Western Massachusetts and only rippled beyond Interstate 495.
Three areas of focus could help the state and its municipalities sustain their momentum:
- Legalize two- to eight-unit projects in more neighborhoods;
- Plan dense, transit-oriented development districts; and
- Boost HDIP and bring other new resources to the table.
André Leroux directs the Gateway Cities Innovation Institute at the MassINC Policy Center.
