Red traffic light with a construction site in the background

Real estate groups fear the city’s plans to boost development fees to fund more affordable housing construction could lead to less housing overall, pushing up prices.

Can Boston vanquish the housing crisis by building less, just so long as what does get built is subsidized and then rented or sold at below-market values?  

And can it be done by simply mandating that developers include in their projects a greater percentage of affordable/subsidized apartments and condominiums, even if it comes at the risk of deflating overall housing production? 

The Wu administration appears game to take that chance in what amounts to a major shift in direction on possibly the biggest problem facing the city of Boston. 

And it comes with prices and rents hitting ever more insane levels amid a dire housing shortage. 

Numbers Don’t Look Good 

As she shakes up how development is done in Boston, Mayor Michelle Wu hasn’t set any new housing construction goals with headline grabbing numbers, which has been the norm now for years with city mayors. 

And by any conventional standard, the numbers are not looking too hot right now. As I reported in my Contrarian Boston newsletter on Jan. 2, approvals of new housing units in Boston fell sharply in 2022. 

The BPDA gave a green light to roughly 60 percent fewer homes, condos and apartments in 2022 compared to the year before. 

But no matter. Rather than acknowledge a shifting market, the Wu administration has been touting a very different metric. 

Subsidized, or “affordable” condos and apartments now make up the highest percentage of overall housing approvals by the city in a decade, or 44 percent of the total, the BPDA noted in a Jan. 4 press release. 

Great. But in reality, with total housing approvals down by a lot, all that means is that affordable units are now a larger piece of a much, much smaller pie. 

In reality, we are talking about less housing for everyone. And at least when it comes to the housing market in Greater Boston, less is definitely not more. 

Officials Urge Focus on Permits 

For their part, though, City Hall is not taking the criticism sitting down. 

In fact, a pair of top city officials is taking to Twitter to push back against criticism Wu’s revamp of housing development in Boston. 

Tiffany Chu, chief of staff to Mayor Michelle Wu, and Sheila Dillon, the city’s housing chief, both posted rebuttals of recent media coverage of the big drop in the number of housing units approved by City Hall. 

However, Chu and Dillon, in separate tweets, contend that the media has been looking at the wrong numbers. 

“Let’s make sure we use the right metrics to track housing production,” Chu tweeted. 

Now that criticism is a little rich. After all, the flurry of stories in the local press over the past week on the drop in housing approvals were based on the very numbers the BPDA routinely touts and publishes on its website. 

All that said, here’s the case Chu and Dillion are making. Instead of looking at approvals of new housing units by the BPDA, a step that can come months or even more than a year before a developer starts construction, we should be looking at buildingpermits issued by the city for new housing units, which is a more immediate measure of activity, the top Wu administration officials contend. 

And yes, when you take a look at permits – which developers don’t typically pull until they are actually ready to start building – the overall picture does look more rosy, with an increase for 2022. 

But when you look a little closer, you see that city officials issued the overwhelming majority of those housing permits in the first half of 2022. There has been a dramatic fall off since then, with just 700 permits in the second half of 2022. That, in turn, amounts to only a third of the condos and apartments that developers broke ground on in the second half of 2021. 

What’s to Blame? 

You can certainly blame a combination of surging interest rates, high construction costs, and a highly uncertain economic environment on spooking some developers. 

Scott Van Voorhis

But is it just pure coincidence that the pullback has occurred as the Wu administration ramps up demands on developers, with heftier fees and demands for more subsidized units? 

For her part, Dillon acknowledges the drop in developers pulling building permits for new housing in the second half of 2022, and attributes it to the larger economic environment, not city policies. 

“There is no doubt in my mind that interest rates have started to impact permits as the end of the calendar year,” Dillon told Banker & Tradesman. 

That said, she’s predicting a rebound in new housing permits and construction in 2023. 

“Developers love Boston and we are very interested in having more housing built,” Dillon said. “A lot of people want to live here.” 

We’ll just have to wait and see, but predictions of a bumper year for new housing in 2023 seem unlikely at the moment.  

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

Top Official Disputes Wu’s Policies Aiding Development Downturn

by Scott Van Voorhis time to read: 3 min