UMass Donahue Institute

The state's inability to keep pace with housing demand is forcing more than 600,000 households to spend more than 30 percent of their income on housing, and 250,000 of those are spending more than 50 percent, a burden felt most by lower-income families and young adults, according to a study conducted by the UMass Donahue Institute's Economic and Public Policy Research Unit.

Entitled "Winners and Losers in the Massachusetts Housing Market," the study uses the 2000 census and other data to quantify the state's housing shortfall and its impact on the population and land use patterns. The study concludes that the state's failure to meet housing demands has created a three-class system of "haves," "have nots," and "hidden homeless," a growing third class of people who live with relatives or friends because they can't find affordable housing.

The "haves" are those who bought their homes previous to the dramatic rise in housing prices over the past four years, and who have benefited from both rising prices and lower interest rates, the study says. The "have nots" are lower-income people and people new to the market who must use more of their income to buy a home, or must pay increasingly high rents for a dwindling supply of rental apartments or seek cheaper housing farther away from job centers.

The third class ­ the hidden homeless ­ appears to be the most obvious example of the state's failure to keep up with housing demand as the 2000 census found that this category ­referred to as sub-families ­has jumped dramatically. The report found that the number of children in subfamilies has grown by 488 percent since 1980, from 26,000 to 52,000.

Co-sponsored by the Citizens Housing and Planning Association and the Massachusetts Housing Partnership, the study found that in 2000, 590,000 households paid more than 30 percent of their income on housing, a jump of 11,000 from 1990. The study also found that of this total, over 91,000 homeowners and 160,000 renters paid more than 50 percent of their income on housing in 2000. Generally, a household that pays more than 30 percent of its income in housing costs is considered to be paying a burdensome amount.

The increasing cost of homeownership was responsible for the rise in households spending a burdensome amount. The study found that between 1990 and 2000, the amount of owner-occupied households paying more than 30 percent of their income on housing grew by 30,000 to 269,000, or 22 percent of all homeowners in Massachusetts. The study found that nearly one-third of the people paying more than 30 percent had bought their homes in 1999 and 2000.

In terms of income, census data revealed that in metropolitan Boston, more than 41 percent of all homeowner households making below the median household income of $50,515 per year pay over 30 percent for housing. Statewide, 37 percent of those making median income pay more than 30 percent of their income on housing.

On the rental side, the study found that a much higher percentage of renters pay a burdensome amount for housing. In 2000, 39 percent of all renters paid 30 percent or more for housing (as opposed to 22 percent for homeowners). All told, 339,000 households paid more than 30 percent of their income on rent. While this represents a 19,000 drop in gross numbers from 1990, the study notes that most of the drop in overpaying took place outside Greater Boston. Like owner-occupied households, renters who moved in 1999 and 2000 have the most affordability problems, accounting for 35 percent of the people paying more than 30 percent of their income for rent.

The study also found:

• Between 1980 and 2003, the nation's largest overall percentage increase in housing prices took place in Massachusetts.
• The failure to build enough new housing largely explains why prices increased. Between 1990 and 2000, the number of new households in Massachusetts grew by 8.7 percent, whereas the number of new housing units increased by 6 percent. To keep pace, the state would have needed to produce 70,000 more housing units than it did.
• From 1990 to 2000, there was a significant loss of two-family, five-to-nine family and 10-to-19 family structures. During the 1990s, 37,563 new multifamily units were created but 20,236 existing units were lost.
• Between 1990 and 2000, the number of vacant units in Massachusetts declined by nearly 48,000, mostly in multi-family housing. The supply of vacant single-family homes dropped by 6 percent whereas the number of vacant units in multi-family buildings dropped by 43 percent.
• From 1990 to 2000, 157,000 single-family homes were built while only 17,327 new multi-family units were added.
• More land is being used to build fewer houses. From 1971 to 1985, two new single-family homes were built per acre used. From 1985 to 2000, single-family housing was built at a density of 1.3 units per acre. This spread of low-density development of single-family housing away from urban job centers contributed to higher amounts of land consumption, and increased the distance that people traveled to work.

The study concludes that the state's failure to keep up with housing demand, especially in multi-family and high density housing, has driven costs of existing housing to unmanageable levels. The study urges the construction of more multi-family and more densely built single-family units, thus relieving the pressure on lower-income people and people new to the housing market.

January 27, 2004