House expense and cost, too expensive payment or high interest rate mortgage concept, heavy house broke savings piggybank metaphor of too much payment and cost.

Sky-high home prices and rents are pushing a growing number of the Bay State’s shrinking middle class to leave for greener pastures.

That’s the word from Clark Ziegler, who has seen the commonwealth’s real estate market go haywire over the past two decades from his perch atop the Massachusetts Housing Partnership, a key quasi-public housing agency. 

Home prices in the state have jumped tenfold since 1980, an increase that has outpaced any other state in the union, including California, notes Ziegler, executive director of the Massachusetts Housing Partnership, citing a federal home price index. For comparison, the nation’s home values have grown not quite fivefold since 1987, or a bit less than half the Massachusetts rate. according to the Case-Shiller Home Price Index. Boston-area rents are near the top nationally, as well. 

And that disparity is starting to bite. Amid a prohibitively expensive real estate market, more than 52,000 residents bailed on the Bay State last year, the sharpest outflow in at least a decade, said Ziegler, the moderator for a panel discussion on the state of the housing market put on by commercial real estate trade group NAIOP-Massachusetts last week. 

In years past, there were enough immigrants from other countries arriving in the state each year to balance out the loss from so-called “domestic” out-migration, but that may no longer be the case, at least based on 2021 numbers. 

The roughly 10,000 immigrants who arrived by bus, plane and other forms of transportation were not nearly enough to cancel out those 52,000 or so residents who packed up their U-Hauls and left for New Hampshire, Florida and other points on the map. 

“We have a long history in Massachusetts of losing population and workers to other parts of the country, but we have been able to make up that population loss with foreign immigration,” he said. “That has really shifted.” 

The Middle Class Forced Out 

Home prices and rents have reached a point where a growing segment of the state’s middle class can’t afford market-rate housing, while low-income families are priced out altogether. Overall, the Massachusetts middle class is now smaller, percentagewise, than in other parts of the country, Ziegler said. 

“It is extraordinary what has happened around home prices in Massachusetts,” Ziegler said. “This is really just not a sustainable pattern.” 

Strong resistance to new housing from officials in many suburbs and towns, in turn, has helped fuel runaway growth in both home prices and rents, according to Ziegler. 

“We are near the extreme of home rule across the United States,” Ziegler said. “We don’t have regional or county-level permitting, and that creates a whole host of problems.” 

There have been some modest signs of an uptick in building, especially in multifamily housing, over the past two years, but the MHP chief contends new construction is still not near the levels it needs to be at in Massachusetts to solve the decades long shortage of housing. 

While residential building permits, for both single family and apartments and condominiums, have edged up to the 20,000-a-year mark, Ziegler contends there is more pent-up demand out there than is showing up in the official statistics, citing adult children living in their parents’ basements or doubling up with roommates, and seniors unable to downsize. 

“I have come to believe the projections are too low,” Ziegler said. “Close to 20,000 [units per year] just isn’t enough,” he said. 

‘Resist and Delay’ 

Also weighing in were three panelists at the NAIOP event: Trinity Financial Managing Director Kenan Bigby, Beacon Communities Senior Development Director Gina Martinez and Tim Reardon, data services director the Metropolitan Area Planning Council. 

Scott Van Voorhis

While many of the state’s older, industrial Gateway Cities are interested in new housing and growth, in other communities it can be different story, said Bigby, an affordable housing developer. 

“It is ‘resist and delay’ and ‘do anything possible to prevent new housing coming in,’” he said. “No one wants to be in a fight for one or two years to do these projects. We want to [build] in places that agree with us.” 

Sadly, it’s a familiar tale. However, the good news is the powers that be – our current governor and governor-elect, and the legislature to some extent – are starting to wake up to the seriousness and sweeping ramifications of our housing crisis. 

Now it’s time for some action. 

Scott Van Voorhis is Banker & Tradesman’s columnist; opinions expressed are his own. He may be reached at   

The High Price of High-Cost Housing

by Scott Van Voorhis time to read: 3 min