Indicator 21: Housing Affordability
How Does Massachusetts Perform?
The percentage of Massachusetts’ renters qualifying as “burdened” by housing costs (spending more than 30% of their income on housing) increased by 0.4% from 2016-2017. Massachusetts ranks 6th in the LTS for burdened renters after California, Florida, New York, New Jersey, and Connecticut. Massachusetts and the U.S. as a whole have seen slight declines in the percentage of burdened renters over the last five years. In every LTS, over 40% of renters spend more than 30% of their income on housing. The percentage of burdened homeowners in Massachusetts went up slightly from 2016-2017, increasing from 26.4% to 26.5%, still down 4.8% from 31.3% in 2012.
Overall, homeowners are significantly less likely to be burdened by housings costs than renters. Homeowners face differing rates of housing cost burden with over 30% of homeowners in California and New Jersey spending more than 30% of their income on housing, and fewer than 20% doing so in Minnesota, North Carolina, Ohio, and Wisconsin. On the surface, the situation seems to be improving in Massachusetts, yet home prices and rents are increasing. Demand for more housing is, however, having a positive effect on the Commonwealth’s economic growth and driving a boom in construction jobs. Around 9,800 construction jobs were created from 2016 to 2017 in Massachusetts, a 4.8% increase in construction employment.
Rising housing costs could potentially be a setback for the Massachusetts economy in the future, as the lack of affordable housing and increasing commuting times may result in losses to regions with more affordable housing stock. Over the last decade, housing prices have risen dramatically in Massachusetts, which currently ranks third highest on the Federal Housing Finance Authority Housing Price index (HPI) among the LTS, behind Florida and Texas. While HPI in the state has just recovered past the mid-2000s levels, it has risen 34.2% from Q4 2012 (when the market bottomed out) to Q2 2018. Florida (65.6%) and California (63.9%) have both experienced especially sharp rises in prices over the same time period, though both had much lower starting points. Texas had the third highest rate of increase (45.0%) and the highest starting HPI among the three LTS with the fastest growing HPI.
Data Source for Indicator 21: Federal Housing Finance Agency, Census Bureau, The Boston Globe, U.S. Department of Labor, Corelogic