Greater Boston housing shortage drives up costs, report says

The economic recovery experienced in Greater Boston over the last several years has steadily increased the cost of living, a result driven by rising housing costs, according to a report released by The Boston Foundation on March 18.

As the nation pulled out of the recession, the labor force in Massachusetts grew at twice the rate of the national average, according to the 12th annual housing report card produced by Barry Bluestone and the Dukakis Center for Urban and Regional Policy at Northeastern University. The growth in the labor force, however, heightened competition for existing housing stock in the Boston area, driving up prices.

Nearly four in 10 homeowners in the region are now “cost burdened,” meaning that they spend more than 30 percent of their income on housing, according to Bluestone. More than half of renters fall into this category, with more than a quarter spending half their income on rent. This cost burden has decreased the real standard of living for many.

The Boston area is not only facing a housing shortage that is driving up prices, but also a lack of availability of the types of housing that “millennials” and baby boomers want, according to the report. Young people who want to live in or near Boston are sharing multi-family dwellings originally intended for working families, and baby boomers looking to downsize frequently have few options within their community.

The number of permits issued for new housing units in the region declined in 2014 for the first time since 2008, despite the region’s population growth. Single-family home sales have declined in Boston’s closest suburbs, but have risen significantly in lower-priced and further out municipalities.

The report makes several recommendations to increase the availability of housing in the region and drive down housing costs. These include the development of 10,000 or more “micro” units to house millennials and the increased use of Chapter 40R “smart growth” overlay districts to increase housing density.

“The Greater Boston Housing Report Card 2014-2015: Fixing an Out-of-Sync Housing Market” is available at www.tbf.org/videos/2015/march/housing-report-card.