By Brooke Thomson
President and CEO

It’s not news that Massachusetts faces a housing crisis, one that is impeding the ability of businesses to retain key employees who cannot afford to live near their jobs.

But the numbers behind the crisis – set out in Massachusetts’ new five-year housing plan released last week – are truly sobering. The report concludes that Massachusetts needs to produce an additional 222,000 homes from 2025 to 2035, equivalent to 7% of the existing homes. to end the housing crisis.

“Lack of housing makes it hard for small business owners to find workers and discourages larger employers from locating or expanding in Massachusetts,” the plan says.

“When renters are forced to move frequently due to rent hikes and young households can’t find a home to purchase, it’s hard to build the community cohesion that comes from long-term housing stability. The search for affordable housing pushes people far from their jobs, worsening traffic congestion.”

Median home prices in Massachusetts rose 73% from 2000 to 2023, after adjusting for inflation, while median household income rose only 4% in real-dollar terms over the same period. As a result, fewer than one quarter of home sales from 2010 – 2019 were affordable to low-moderate income households (at or below 70% of area median income).

Ther report includes other disquieting facts about the state housing economy:

• Massachusetts has seen strong growth in housing demand during the past 15 years. More than 375,000 Millennials – 43% born and raised in Massachusetts – formed new households between 2009 and 2019.
• But housing production over recent decades hasn’t kept up with housing demand; as a result, the share of homes available for sale or rent has shrunk to only 1.6%, a historically low vacancy rate. This creates intense competition for the homes that are available.
• The state added an average of 19,000 housing units per year from 2010 to 2020, but only 11,600 homes were issued building permits in 2023. People seeking to build new homes face challenges such as restrictive zoning, elevated construction and operation costs, high expectations from investors, lack of water and wastewater infrastructure, and increasing demands for sustainability, affordability, and design.
• Household budgets are burdened by rising insurance costs (up 40% nationwide since 2017); transportation costs ($13,000 annually for the average household that owns one or more cars); and utilities such as heat, electricity, and broadband service.
• The number of households paying more than 30% of their income for housing has been rising across all income groups. More than one quarter of middle-income households are cost burdened, and more than three quarters of very low-income households.

Development of the five-year state plan comes after Governor Maura Healey directed the Executive Office of Housing and Livable Communities (EOHLC) to develop the first comprehensive look at the state’s housing needs in at least a generation. The state conducted 34 listening sessions, engaged more than three thousand people, and worked extensively with a Housing Advisory Committee that included representatives from many different sectors.

AIM member companies remain concerned that the soaring cost of housing is driving employees to pull up stakes for less expensive regions of the country. Part and parcel of ensuring the availability of labor is to ensure that the workers who fuel our companies can afford to live in Massachusetts, buy a house and raise families here.

The commonwealth has made a good start addressing the housing issue. The Legislature passed and the governor signed last year the historic $4 billion Affordable Homes Act and AIM has pledged to work with elected officials to ensure that the law lives up to its potential to moderate the cost of housing.

The association also supports full implementation of the MBTA Communities Act, which requires 177 cities and towns to provide as-of-right zoning for multifamily housing. AIM submitted a friend-of-the-court brief last September to the Massachusetts Supreme Judicial Court in support of the MBTA Communities Act.

And just last Thursday, the Healey Administration announced $158 million in low-income housing tax-credit and subsidy awards for 14 affordable housing projects across the state. These awards were made possible in part by the $1 billion tax relief bill signed by the governor in 2023, which raised the Low-Income Housing Tax Credit to $60 million annually, a $20 million increase that allows the state to support more affordable housing production. 

We all know this: housing costs are too high. Sales and rent prices are at record levels, having risen faster than incomes and faster than almost any other state. The commonwealth has a housing supply problem, and employers know only too well that the only solution is to build our way out and provide thousands of new homes for our workers.