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
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Detouring the Mass Exodus: Housing as an Economic Development Strategy
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 - PowerPoint PPT Presentation
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Detouring the Mass Exodus: Housing as an Economic Development Strategy
Barry BluestoneDean, 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
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
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
Jan-9
3
Jan-9
4
Jan-9
5
Jan-9
6
Jan-9
7
Jan-9
8
Jan-9
9
Jan-0
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US MA
Economic Activity Index: Massachusetts vs. U.S. (1993-2007)
January 1993 – October 2001
Leading the Nation
October 2001 – June 2007Lagging the Nation
Total Massachusetts Non-Farm Employment, Seasonally Adjusted
Economic Policy Institute, Family Budget Calculator, 2005
Among 304 U.S. Metropolitan Areas
Top Decile: Metro Area Cost of Living
Boston $ 64,656Washington (D.C. portion) $ 61,440Nassau-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) $ 55,704Springfield, MA $ 55,320Minneapolis-St. Paul, MN $ 54,948 Nashua, NH $ 54,852 Santa Cruz-Watsonville, CA $ 53,808Oakland, CA $ 53,412 San Jose, CA $ 52,800 Pittsfield, MA $ 52,632 Rochester, MN $ 51,288
49,716Boulder-Longmont, CO $ 49,596Bridgeport, CN $ 49,272Manchester, NH $
49,152Santa Rosa, CA $ 48,924Albany-Schenectady-Troy, NY $ 48,900Hartford, CN $ 48,684Trenton, NJ $ 48,576Rochester, NY $ 48,540
Economic Policy Institute: Family Budget Calculator
Universe: 304 U.S. Metro Areas
A Tale of Two CitiesBasic Budget2 Parents, 2 Children
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
A Tale of Two Cities
Source: Economic Policy Institute, “Family Budget Calculator, 2005”
Regional Average Monthly Housing Costs (2004)
$892.60
$708.46 $692.82$617.23 $616.29 $566.14 $583.67
$720.00
$914.63
-$100
$100
$300
$500
$700
$900
$1,100
$1,300
Hou
sing
Cos
ts
Boston ($1,266)
Source: Economic Policy Institute, “Family Budget Calculator, 2005”
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
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
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
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
Employment Growth (%) (2000-2004)
-1.00%
-0.50%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
1 2 3 4 5 6 7 8 9 10
Housing Price Decile
Per
cent
Cha
nge
Low Price High Price
Economic Policy Institute, “Family Budget Calculator, 2005”; U.S. Bureau of Labor Statistics
Universe: 245 U.S. Metro Areas
0.95%
2.91%
2.29%
0.86%
1.53%
0.68%
-0.68%
0.12%
-0.62%
1.49%
Employment Growth (%) (2000-2004)
-6.00%
-5.00%
-4.00%
-3.00%
-2.00%
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
1 2 3 4 5 6 7 8 9 10
Housing Price Decile
Per
cent
Cha
nge
Boston MSA (-4.9%)
Economic Policy Institute, “Family Budget Calculator, 2005”; U.S. Bureau of Labor Statistics
Lunenburg Lynnfield Natick North Andover North Reading Northampton Norwood Plymouth Total: 5,813 Units
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
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