Photo by James Sanna | Banker & Tradesman Staff
2023 ushered in new policy initiatives to tackle the housing crisis. Is 2024 the year we get production back on track?
Large-scale challenges demand responses of equal proportion. The ongoing housing crisis has made it abundantly clear that we need to implement big changes to get back on the right track with housing production. The good news is that leadership at all levels of government has signaled they are ready to rise to the occasion and that they are willing to work with one another to achieve this critical objective. If we consider 2023 the year that we got serious about addressing this crisis, 2024 may be the year we start to see positive momentum.
We did not reach this moment overnight. Some of the causes are deep-rooted and have had lasting effects over the years. As-of-right multifamily opportunities are difficult to come by in communities where NIMBYism and antiquated zoning policies deter or outright prohibit the development of these properties.
Meanwhile, the community process that governs many residential development proposals can be off-putting in the best of times, due to the uncertainties of timelines that drive up costs. In the economic climate we currently find ourselves in, with higher interest rates and construction costs, it can mean interest in building in this market evaporates altogether.
The impact of this situation should be concerning to all of us. The high cost of housing and limited inventory results in families moving further away from employment centers, in some cases leaving the state altogether, to search for more attainable housing options and improved quality of life.
This can have a damaging effect on the commonwealth’s economic competitiveness, deterring new companies from coming to Massachusetts. Employers, conscious of their workforce’s housing opportunities, will deprioritize Massachusetts – which Amazon reportedly did when it was searching for a HQ2 site, for concerns about retaining talent and providing compensation that reflects the cost of living.
Even those comfortable with their situation will feel the effects with fewer businesses to patronize and lower municipal tax revenue, which will mean reduced community services.
Clarity Elevates Investor Confidence
The encouraging trend is that leaders at the local and state level have recognized that getting residential development projects off the ground is critical to the region’s health.
A broad array of policies has been introduced of late, including Boston’s office-to-residential pilot program and the Healey administration’s $4 billion housing bonding and policy bill that keeps affordable housing for families and seniors at the forefront of the conversation. Housing-focused rezoning plans have been submitted to advance the MBTA Communities Act in Boston’s suburbs. Overhauling zoning in Boston itself has also been discussed and is earmarked for 2024.
Individually, these policies are helpful but no panacea. Combined, they represent an opportunity to make housing more attractive to developers and to spur investments that can improve affordability and the economic health of the region. While hard costs like materials and labor are difficult to reduce, soft costs incurred through long, arduous permitting periods merit serious consideration and it’s encouraging that we’re taking a hard look at how to address this.
By introducing clarity on where you can build and what you can build, and by streamlining the approval process, you are addressing some of the biggest hurdles that have hindered proposals. Bringing greater clarity to the development process is long overdue and can elevate investor confidence, opening the door to more projects becoming viable and moving forward.
Gary Kerr
Bring the Public Along
As we turn the page to 2024, I, along with my peers, will closely be watching the implementation of these policies and how the business community responds. Equally intriguing, though, will be the public response.
One consideration that should be thought through is how to handle the expected pushback from communities that have opposed multifamily development up to this point. Within this is the question of how to engage with residents of municipalities facing large-scale construction in their communities for the first time.
Tackling a crisis of this magnitude will require everyone pushing in the same direction. Elected officials and municipal staff will need to support the policies they put forth by articulating the vision for the future and reinforcing the need for housing to get a reluctant public onboard.
Gary Kerr is the managing director for Greystar Development Services in the Northeast region.
