The Lack of Affordable Housing in New England: How Big a Problem? Why is it Growing? What are We Doing About it?

Abstract

Although housing costs in greater Boston and elsewhere around the region have leveled off, affordable housing is still high on the public policy agenda in every New England state. A growing chorus of employers and policymakers are warning that the region's high cost of housing is now undermining its ability to attract and retain workers and businesses. This paper presents a thorough, region-wide analysis of the housing affordability problem in New England. We construct three affordability indicators to examine differences in the cost of housing across socioeconomic, demographic, and occupational groups, for every New England state and for the region's principal metropolitan areas.We find that owner-occupied housing is often not affordable, particularly in southern New England, and the problem is getting worse over time. In contrast, New England's rental housing is expensive relative to the rest of the nation, but incomes are high enough that rentals are still affordable to most New Englanders. However, the lack of affordable owner-occupied housing is a problem for both middle-income and very lowincome households. Households headed by young professionals can afford to purchase median homes in New England, but not as easily as they used to, and not as easily as in most rival metropolitan areas. At the same time, the very low-income are being squeezed by falling household incomes coupled with rapidly appreciating prices for houses at the lower end of the price distribution. Finally, fewer rental and owner-occupied units are actually available to the very low-income than in the past because households with higher incomes are moving down the housing distribution in order to secure shelter. Finally, we summarize the strategies New England governments have adopted to address the problem. These policies attempt either to increase the ability of households to rent or purchase a home or to increase the supply of affordable units. Supply-side strategies are likely to be particularly critical in improving housing affordability given the sluggish growth in the region's housing stock over the past decade.

Housing challenges in Saudi Arabia: the shortage of suitable housing units for various socioeconomic segments of Saudi society

“…In other words, experts believe that the problem of unavailability of suitable housing units for some segments of the Saudi society is mainly the result of high cost. These findings are consistent to some extent with some other studies (Al-Hargi et al , 2004; Sasser and Zhao, 2007; Glaeser and Ward, 2009; Yates, 2016; Hansson, 2017).…”

“…Land use regulations play a critical role in defining the boundaries of the cities, spatial patterns for physical development and housing cost. High price of land suitable for housing has emerged recently in several studies carried out in different countries across the world, including the USA, Germany, Sweden and Saudi Arabia (Al-Hargi et al , 2004; Sasser and Zhao, 2007; Glaeser and Ward, 2009; Yates, 2016; Hansson, 2017). Indeed, it is described as a major obstacle to acquiring appropriate and adequate housing at an affordable cost.…”

“…A number of international and local studies (Feldman, 2002; Al-Kadi et al , 2004; Sasser and Zhao, 2007; Assaf et al , 2010; Makinde, 2014; Yates, 2016) point out that the high cost of construction is one of the major obstacles to the provision of the suitable housing units for various buyers. Al-Hargi et al (2004) and Alzamil (2014) alluded to the shortage of specialized companies in housing construction projects as one of the causes of the high cost of construction in Saudi Arabia.…”

“…In fact, a number of studies have revealed that declining loan interest rates have a critical impact on the demand for houses. For instance, Sasser and Zhao (2007) point out that the interest rate on the 30-year fixed mortgage in the USA dropped by more than one quarter in a decade, from 7.9 percent in 1995 to 5.8 percent in 2004. The result of this drop was the creation of a stimulus for the demand of houses.…”

Voting with Their Feet? Local Economic Conditions and Migration Patterns in New England

“…At the same time, real house prices jumped 50 percent in New England between 2000 and 2005, compared with an increase of only 33 percent nationwide (see Figure 2). Moreover, household incomes did not keep pace with the run-up in house prices, causing housing affordability to decrease during this period in every New England state (Sasser, Zhao, and Rollins 2006).…”