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Detouring the Mass Exodus: Housing as an Economic Development Strategy

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Young professionals are having a more difficult time buying their first homes ... High Price ... New Starter Home Legislation will help as well ... – PowerPoint PPT presentation

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Title: Detouring the Mass Exodus: Housing as an Economic Development Strategy


1
Detouring the Mass Exodus Housing as an
Economic Development Strategy
  • Barry Bluestone
  • Dean, School of Social Science, Urban Affairs,
    and Public Policy
  • Director, Center for Urban and Regional Policy
    Northeastern University
  • Northeast Association of REALTORS
  • Holiday Inn
  • Tewksbury, Massachusetts
  • October 3, 2007

2
Presentation Outline
  • Employment Trends
  • Population Dynamics
  • Housing Prices
  • Cost of Living across U.S. Metro Areas
  • Impact of Housing Prices on Employment
  • Impact of Housing Prices on Migration
  • Housing Price/Vacancy Relationship
  • Chapter 40R 40S

3
Economic Activity Index Massachusetts vs. U.S.
(1993-2007)
January 1993 October 2001 Leading the Nation
October 2001 June 2007 Lagging the Nation
4
Massachusetts Employment Picture 1996-2007
5
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6
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7
U.S. Bureau of the Census
8
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9
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10
Where did they go?
11
The Cost of Living Challenge
12
Single Family Home Prices (1996-2007
1996-2005 139
2005-2007 - 10
13
2005Class A Apartment Rents
Source Forbes Magazine
Calculations based on 900 Sq.ft. Apartment
14
Housing Affordability in Greater Boston
15
Source Economic Policy Institute, Family Budget
Calculator, 2005
16
Boston 64,656
Universe 304 U.S. Metro Areas
Source Economic Policy Institute, Family Budget
Calculator, 2005
17
Boston Family Budget 4 Persons
Among 304 U.S. Metropolitan Areas
  • Housing Costs 7th Highest MSA
  • Child Care 7th Highest MSA
  • Health Care 7th Highest MSA
  • Personal Care 6th Highest MSA
  • Fed/State Tax 2nd Highest MSA
  • Total Cost 1st Highest MSA

Economic Policy Institute, Family Budget
Calculator, 2005
18
Top Decile Metro Area Cost of Living
  • Boston 64,656
  • Washington (D.C. portion) 61,440
  • Nassau-Suffolk, NY 60,780
  • Stamford-Norwalk, CN 60,720
  • Lawrence (Mass. portion) 59,280
  • New York, NY 58,656
  • Barnstable-Yarmouth, MA 58,236
  • San Francisco, CA 57,624
  • Worcester (Mass. portion) 55,704
  • Springfield, MA 55,320
  • Minneapolis-St. Paul, MN 54,948
  • Nashua, NH 54,852
  • Santa Cruz-Watsonville, CA 53,808
  • Oakland, CA 53,412
  • San Jose, CA 52,800
  • Pittsfield, MA 52,632
  • Rochester, MN 51,288
  • Monmouth-Ocean, NJ 50,736
  • San Diego, CA 50,088
  • Newark, NJ 49,992
  • New Haven-Meriden, CN 49,848
  • Honolulu, HI 49,824
  • Philadelphia (Pa. portion) 49,716
  • Boulder-Longmont, CO 49,596
  • Bridgeport, CN 49,272
  • Manchester, NH 49,152
  • Santa Rosa, CA 48,924
  • Albany-Schenectady-Troy, NY 48,900
  • Hartford, CN 48,684
  • Trenton, NJ 48,576
  • Rochester, NY 48,540

Universe 304 U.S. Metro Areas
Economic Policy Institute Family Budget
Calculator
19
A Tale of Two CitiesBasic Budget2 Parents, 2
Children
A Tale of Two
Cities
  • Boston
  • Monthly Housing 1,266
  • Monthly Food 587
  • Monthly Child Care 1,298
  • Monthly Transportation 321
  • Monthly Health Care 592
  • Monthly Other Necessity 500
  • Monthly Taxes 824
  • Monthly Total 5,388
  • Annual Total 64,656
  • Raleigh-Durham-Chapel Hill
  • Monthly Housing 779
  • Monthly Food 587
  • Monthly Child Care 866
  • Monthly Transportation 358
  • Monthly Health Care 368
  • Monthly Other Necessity 369
  • Monthly Taxes 350
  • Monthly Total 3,677
  • Annual Total 44,124

Source Economic Policy Institute, Family Budget
Calculator, 2005
20
Boston (1,266)
Source Economic Policy Institute, Family Budget
Calculator, 2005
21
New Housing Research
  • New England Public Policy Center
  • Alicia Sasser, Bo Zhao, and Darcy Rollins
  • The Rappaport Institute for Greater Boston
  • Edward L. Glaeser
  • The Center for Urban and Regional Policy
  • Barry Bluestone

22
New England Public Policy Center
  • Region-wide Analysis of Housing Affordability
  • Owner-Occupied Housing is often not affordable
    and the problem is getting worse
  • Young professionals are having a more difficult
    time buying their first homes
  • Very low income families being squeezed out of
    the market by working and middle income families
    seeking housing
  • Easier access to mortgage money increased demand
  • Strict regulations on building is constraining
    supply
  • Need policies to increase supply of working and
    middle income housing

23
Rappaport Institute Study
  • Limits on housing construction are responsible
    for the recent loss in population in
    Massachusetts
  • Restricting the production of housing leads to
    greater volatility in housing prices
  • Significant price increases associated with
    restricted supplies of housing subsequently
    appear to lead to declines in employment and
    incomes

24
CURP Study of Housing, Employment and Population
  • Metro areas with highest cost of living are
    suffering slow employment growth or outright job
    loss
  • Metro areas with the highest cost of living are
    suffering net out-migration of domestic
    population
  • Paradox The shortage of housing supply can lead
    to a future sharp decline in housing prices as
    jobs and workers leave the state

25
2.91
2.29
0.95
1.53
1.49
0.86
0.68
0.12
-0.68
-0.62
Low Price
High Price
Universe 245 U.S. Metro Areas
Economic Policy Institute, Family Budget
Calculator, 2005 U.S. Bureau of Labor Statistics
26
Boston MSA (-4.9)

Universe 245 U.S. Metro Areas
Economic Policy Institute, Family Budget
Calculator, 2005 U.S. Bureau of Labor Statistics
27
Employment Change () (2000-2004)
?Emp(2000-2004) -.1466 .0000396
Housing Cost (4.07)
-2.291E-007 Housing Cost SQ (4.04)
N 245 Adj. R Square .056
Boston MSA
28
2.53
1.98
1.09
1.06
0.93
0.84
0.62
0.50
-0.02
-0.21
Low Cost
High Cost
Universe 245 U.S. Metro Areas
Economic Policy Institute, Family Budget
Calculator, 2005 U.S. Bureau of Labor Statistics
29
Boston MSA (-5.2)
Universe 304 U.S. Metro Areas
Economic Policy Institute, Family Budget
Calculator, 2005 U.S. Bureau of the Census
30

Internal Migration ( Change)
?Internal Migration - .146
.000399 Housing Costs (7.03) -
2.475E-007 Housing Costs SQ (7.39)
N 304 Adj. R Square .153
Boston MSA


Monthly Housing Cost
31

Internal Migration ( Change)
?Internal Migration - .146
.000399 Housing Costs (7.03) -
2.475E-007 Housing Costs SQ (7.39)
N 304 Adj. R Square .153
Boston MSA
San Francisco Stamford-Norwalk San
Jose Boston Oakland Nassau-Suffolk


Monthly Housing Cost
32
2.19
1.54
1.40
1.04
0.60
0.41
0.39
0.16
0.19
-2.12
Universe 304 U.S. Metro Areas
Boston
Economic Policy Institute, Family Budget
Calculator, 2005 U.S. Bureau of the Census
33
What is the relationship between housing prices
and housing supply?
34
Housing Price Appreciation vs. Vacancy Rates
Housing Price Appreciation (1995-2005)
Universe 75 U.S. Metro Areas
Office of Federal Housing Enterprise Oversight
U.S. Census Bureau
35
Housing Price Appreciation (1995-2005)
Universe 75 U.S. Metro Areas
Office of Federal Housing Enterprise Oversight
U.S. Census Bureau
36
Housing Price Decline Metro Areas
U.S. Office of Federal Housing Enterprise
Oversight
37
Chapter 40R and 40S
  • New Steps to Solve the Massachusetts Housing
    Crisis and protect the Commonwealths economy

38
Chapter 40R Communities
  • Amesbury
  • Brockton
  • Chelsea
  • Dartmouth
  • Grafton
  • Haverhill
  • Kingston
  • Lakeville
  • Lunenburg
  • Lynnfield
  • Natick
  • North Andover
  • North Reading
  • Northampton
  • Norwood
  • Plymouth
  • Total 5,813 Units

39
Filed for 40R Filed for Technical
Assistance
  • Belmont
  • Boston
  • Gardner
  • Lawrence
  • Total 2,101 Units
  • Holyoke
  • Newbury
  • Reading
  • Westport
  • Total 1,024 Units
  • Grand Total 8,938 Units

40
(No Transcript)
41
Conclusions
  • The high price of housing in Massachusetts is
    indeed a significant factor in the decline in
    employment and population
  • The high cost of living beyond housing
    including health care, day care, and taxes
    contributes to the decline in employment and
    population
  • An increase in housing supply could inoculate
    homeowners against a long-term precipitous
    decline in housing values by improving the job
    climate and discouraging outmigration
  • Chapter 40R and 40S are the beginning of a
    solution
  • New Starter Home Legislation will help as well
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