Andrew Mikula
A recent Pioneer Institute study leaves little doubt that Greater Boston faces a housing crisis. But to truly understand the nature of the problem, residents should look at the report in conjunction with studies of demographic and migration trends.
The Pioneer study found that as of last November, the median down payment on a house in Greater Boston – $105,300 – was more than the region’s annual median household income. By June of 2023, the average monthly rent in Boston topped $3,000.
Exorbitant prices like these create ripple effects, as evidenced by a Greater Boston Chamber of Commerce survey of over 800 area residents between the ages of 20 and 30. More than a quarter of them said they were thinking of leaving the area in the next five years, and housing affordability was the leading reason why.
Meanwhile, an April study from Boston University Management Professor Mark Williams found that net outmigration from Massachusetts rose by a staggering 1,100 percent since 2013. The biggest increase in outmigration was among 26-to-34-year-olds – the same individuals the commonwealth desperately needs to be the backbone of its future workforce.
At the same time, housing production is down across the U.S. and in the Boston area. Nationally, the cost of construction materials was 43 percent higher at the start of this year than in January 2020. A construction labor shortage also places upward pressure on costs. The cost of building a typical “starter home” in Massachusetts is second highest in the nation, 21 percent above the national average.
Demographics Drive Demand
The upshot is that the region’s housing shortage is severely undermining efforts to attract and retain residents. Between 2010 and 2020, the number of households in Greater Boston grew by 10.7 percent, the fastest clip since the 1970s, while the number of housing units only rose 7.9 percent.
Before COVID, a booming economy drew many newcomers to the region, but without adequate market turnover it’s increasingly difficult for newly formed households to find available housing. Greater Boston suffered a 55 percent decline in the number of active home listings between January 2019 and January 2024.
Crucial to facilitating more turnover is increasing housing options for seniors who wish to age in place. Between 2025 and 2030, more than 300,000 Greater Boston residents will turn 70. Many of this cohort currently live in suburban single-family homes that, in previous generations, would have already turned over to younger families.
But increasingly fewer seniors want to live in nursing homes or with relatives as they age, and thus will require smaller homes that are easy to maintain, in single-level living arrangements that better enable mobility. Allowing Baby Boomers to downsize within their current communities will require rezoning some suburban areas for more of these smaller homes, whether they’re ranch-like cottages or condominium buildings with elevators.
Speaking of the suburbs, it’s true that Millennials – that supposed generation of city-lovers – have relocated to suburban areas in large numbers in recent years. But recent academic research has identified the biggest factors in this relocation as “housing affordability and the demand for larger homes.”
Thus, policymakers should do more to incentivize the construction of larger, family-oriented housing in urban areas, such as with density bonuses and streamlined permitting processes. As Boston Mayor Michelle Wu undertakes a comprehensive overhaul of her city’s zoning code, such an incentive would better prepare the city for a new generation of working families. In the meantime, young renters and people of means have poured back into Boston post-COVID, such that, by 2022, the residential vacancy rate in the city was the lowest it has been since 2016.
The phrase “demographics are destiny” is trite. But efforts to improve economic competitiveness by addressing Greater Boston’s housing shortage must be rooted in broadly applicable community needs. In context, this means emphasizing the evolving circumstances of those who are already here.
Andrew Mikula is a senior housing fellow at the Pioneer Institute and the author of “Supply Stagnation: The Root Cause of Greater Boston’s Housing Crisis and How to Fix It.”
