A Glance at the Commonwealth’s Economy
and the Region’s Housing Challenge
Barry Bluestone
NAIOP Breakfast Forum
November 19, 2015
Dukakis Center For Urban and Regional Policy
Northeastern University
School of Public Policy & Urban Affairs
www.northeastern.edu/dukakiscenter
A “Think and Do” Tank
First, a look at the Massachusetts
economy:
Dukakis Center for Urban & Regional Policy

www.northeastern.edu/dukakiscenter
Total Non-Farm Employment: Seasonally-Adjusted
Massachusetts 2003-2015
September 2015
3,492.8
3,500.0
3447.6
3,450.0
3,400.0
3,350.0
April 2008
3,318.0
3,304.3
in 000's
3,300.0
3,250.0
October 2003
3,178.8
3,200.0
October 2009
3,161.3
3,150.0
3,100.0
3,050.0
2003
2004
2005
2006
2007
2008
2009
2010
2011
Dukakis Center for Urban & Regional Policy  www.northeastern.edu/dukakiscenter
2012
2013
2014
Oct
Jul
Jan
Apr
Oct
Jul
Jan
Apr
Oct
Jul
Apr
Oct
Jan
Jul
Apr
Jan
Jul
Oct
Jan
Apr
Oct
Jan
Apr
Jul
Oct
Jan
Apr
Jul
Oct
Jul
Jan
Apr
Oct
Jul
Apr
Oct
Jan
Jul
Apr
Jan
Jul
Oct
Apr
Jan
Jul
Oct
Apr
Jan
3,000.0
Total Non-Farm Employment Seasonally-Adjusted
Massachusetts 2009-2015 (July)
Employment Growth
2009 – September 2015:
3,550,000
3,492,100
3,500,000
+289,500 Jobs
3,450,000
3,413,558
3,400,000
3,359,092
3,350,000
3,301,917
3,300,000
3,250,250
3,250,000
3,203,342
3,214,017
3,200,000
3,150,000
3,100,000
3,050,000
2009
2010
2011
2012
2013
Source: Bureau of Labor Statistics
Dukakis Center for Urban & Regional Policy  www.northeastern.edu/dukakiscenter
2014
2015 (July)
Projected Employment by Sector:
2014-2018
Payroll Employment Trends Over the Forecast,
Massachusetts
Professional and Business
Services
2011q2=100
114.0
Source: NEEP, Moody's Analytics
Construction
112.0
Leisure and Hospitality
110.0
Education & Health Services
108.0
Information
Total Payroll
106.0
Financial Activities
104.0
Other Services
102.0
Trade, Transportation, Utilities
100.0
Manufacturing
98.0
14q1
15q1
16q1
17q1
18q1
Government
Dukakis Center for Urban & Regional Policy  www.northeastern.edu/dukakiscenter
Massachusetts Civilian Unemployment Rate 20092015
8.0%
7.6%
7.5%
7.5%
7.0%
September: 4.6%
6.6%
6.4%
6.5%
6.1%
6.0%
5.7%
5.5%
5.0%
4.7%
4.5%
4.0%
2009
2010
2011
2012
2013
Source: Bureau of Labor Statistics
Dukakis Center for Urban & Regional Policy  www.northeastern.edu/dukakiscenter
2014
2015 (July)
Five County Greater Boston Total Non-Farm Employment
2008-2014 (December)
2,400,000
2,354,988
5-Year Growth: 213,000 additional jobs
2,350,000
2,301,877
2,300,000
2,262,857
2,250,000
2,221,277
2,215,341
2,187,518
2,200,000
2,141,957
2,150,000
2,100,000
2,050,000
2,000,000
2008
2009
2010 (Dec.)
2011 (Dec.)
2012 (Dec.)
Source: Bureau of Labor Statistics
Dukakis Center for Urban & Regional Policy  www.northeastern.edu/dukakiscenter
2013 (Dec.)
2014 (Dec)
Real Average Weekly Wage – Private Industry –
Massachusetts 2001-2014 (Real 2014 $)
$1,260
$1,246
$1,240
$1,227
$1,227
$1,223
$1,222
2010
2011
$1,223
$1,220
$1,200
$1,180
$1,204
$1,204
2008
2009
$1,193
$1,190
$1,188
2004
2005
$1,173
$1,161
$1,160
$1,154
$1,140
$1,120
$1,100
2001
2002
2003
2006
2007
Source: Massachusetts Department of Labor – ES202 Data
Dukakis Center for Urban & Regional Policy  www.northeastern.edu/dukakiscenter
2012
2013
2014
Some Good News on the
New Housing Pipeline
Total Housing Permits Issued in 5-County Greater
Boston Region 2000-2015
16000
15,107
14000
12,795
12,713
12000
10000
12,332
11,120
10,938
10,733
2013
2014
9,772
9,563
8,929
8,558
7,966
8000
6,529
5,823
6000
5,275
4,714
4000
2000
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Source: U.S. Census Building Permit Survey for Essex, Middlesex, Norfolk, Plymouth, and Suffolk Counties
Dukakis Center for Urban & Regional Policy  www.northeastern.edu/dukakiscenter
2012
2015
(est.)
Number of Housing Unit Permits in Five-County Greater
Boston Region, by Structure Type, 2000-2015
10,000
9,000
8,722
8,000
7,564
7,000
6,376
6,000
5,000
4,131
4,000
3,523
3,000
2,000
2,682
2,527
1,929
1,180
1,000
660
550
0
2000
2001
2002
2003
2004
2005
Single-Family
2006
2007
2008
Two- to Four-Unit
2009
2010
2011
2012
5 or More Unit
Source: U.S. Census Building Permit Survey for Essex, Middlesex, Norfolk, Plymouth, and Suffolk Counties
Dukakis Center for Urban & Regional Policy  www.northeastern.edu/dukakiscenter
2013
2014
2015
(est.)
5+ Unit Housing Permits as a Percent of All Housing
Permits in Greater Boston, 2000-2015
80%
68.2%
70%
58.1%
60%
50.1% 50.6% 51.1%
57.1%
51.9%
53.2%
50%
42.8% 43.3%
40.9% 41.7%
43.1%
40%
30.0%
30%
27.1%
26.4%
20%
10%
0%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Source: U.S. Census Building Permit Survey for Essex, Middlesex, Norfolk, Plymouth, and Suffolk Counties
Dukakis Center for Urban & Regional Policy  www.northeastern.edu/dukakiscenter
2013
2014
2015
(Est.)
Home Prices Continue to Rise
Annual Percent Change in Case-Shiller Single-Family House Price
Index, Greater Boston Metropolitan Area, 1987-2015 (Est.)
20%
15.6%
14.3%
15%
12.8%
11.7%
11.5%
9.5%
10%
6.0%
5%
4.0%
3.0%
2.2%
-…
0%
9.8%
9.4%
7.2%
6.6%
6.0%
7.1%
4.0%
2.2%
-0.3%
1.9%
0.5%
-1.9%
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
(est.)
-2.0%
-4.0%
-5%
-4.8%
-5.8%
-5.7%
-8.1%
-10%
Source: Case-Shiller Home Price Index
Dukakis Center for Urban & Regional Policy  www.northeastern.edu/dukakiscenter
Greater Boston Housing Cycles, 1988-1997 vs. 2005-2015 Case-Shiller SingleFamily Home Price Index Months Since Beginning of Price Decline
1.10
1.10
1.05
In 2015 single-family home prices finally -- on average -reached previous 2005 peak
1.00
1.00
1.00
0.97
0.95
0.90
0.90
0.84
0.85
0.80
0.80
0.80
1
3
5
7
9
11
13
15
17
19
21
23
25
27
29
31
33
35
37
39
41
43
45
47
49
51
53
55
57
59
61
63
65
67
69
71
73
75
77
79
81
83
85
87
89
91
93
95
97
99
101
103
105
107
109
111
113
115
117
0.75
1988-1997 Cycle
2005-2015 Cycle
Source: Case-Shiller Home Price Index
Dukakis Center for Urban & Regional Policy  www.northeastern.edu/dukakiscenter
But vast differences depending on
where you live
Percent Change in Single Family Sales Price 2005-2015
•
•
•
•
•
•
•
•
Cambridge
Boston
Brookline
Newton
Somerville
Lexington
Concord
Watertown
+101.2%
+ 73.3%
+ 51.8%
+ 47.4%
+ 34.7%
+ 32.3%
+ 26.9%
+ 24.4%
Dukakis Center for Urban & Regional Policy  www.northeastern.edu/dukakiscenter
But vast differences depending on
where you live
Percent Change in Single Family Sales Price 2005-2015
•
•
•
•
•
•
•
•
Randolph
Lawrence
Lowell
Haverhill
Revere
East Bridgewater
Everett
Lynn
- 24.3%
- 21.2%
- 16.5%
- 15.9%
- 14.7%
- 14.2%
- 12.3%
- 12.1%
Dukakis Center for Urban & Regional Policy  www.northeastern.edu/dukakiscenter
Home Prices Rising; Condo Prices
Soaring
Annual Median Price of Single-Family Homes in
Five-County Greater Boston Region, 2000-2013
$450,000
2009-2015
+19%
$405,198
$405,059
$394,571 $397,928
$400,000
$395,740
$385,560
$380,931
$359,086
$353,178
$350,000
$354,207
$339,123
$345,037 $348,096
$326,657
$300,000
$284,713
$260,196
$250,000
$200,000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Source: The Warren Group
Dukakis Center for Urban & Regional Policy  www.northeastern.edu/dukakiscenter
2012
2013
2014
2015:II
Annual Median Price of Condominiums in FiveCounty Greater Boston Region, 2000-2013
$450,000
2009-2015
+43%
$400,000
$401,398
$350,272
$350,000
$333,579
$306,523
$300,458
$300,000
$301,619
$309,940
$302,137
$304,465
$287,938
$293,679
$279,911
$261,357
$242,520
$250,000
$199,576
$200,000
$176,686
$150,000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Source: The Warren Group
Dukakis Center for Urban & Regional Policy  www.northeastern.edu/dukakiscenter
2012
2013
2014
2015
(through
June)
Ratio of Condominiums to Single-Family Home Prices in
Five-County Greater Boston Region, 2000-2013
1.05
0.99
1.00
0.95
0.89
0.90
0.88
0.88
0.89
0.85
0.85
0.83
0.83
2009
2010
0.80
0.75
0.74
0.74
2002
2003
0.75
0.74
2004
2005
0.76
0.77
2006
2007
0.70
0.70
0.68
0.65
0.60
2000
2001
2008
2011
2012
Source: The Warren Group
Dukakis Center for Urban & Regional Policy  www.northeastern.edu/dukakiscenter
2013
2014
2015
(through
June)
Annual Median Price of Homes in Two-Unit and Three-Unit
Structures in Five-County Greater Boston Region, 2000-2015
$492,182
$500,000
2009-2015
+ 95%
$483,192
$458,565
$454,028
$450,000
$477,057
$443,084
$412,859
$394,060
$400,000
$300,000
$250,000
$355,418
$347,050
$350,000
$263,289
$244,172
$273,328
$314,274
$275,885
$225,460
$200,000
$150,000
$100,000
$50,000
$0
2000
2001
2002
2003
2004
2005
2006
Two-Unit
2007
2008
2009
2010
2011
Three-Unit
Source: The Warren Group
Dukakis Center for Urban & Regional Policy  www.northeastern.edu/dukakiscenter
2012
2013
2014
2015
(through
June)
Rents continuing to soar
Monthly Rent for Boston Area Apartments, 2 Bedroom
Units, 2009 Q:III - 2005 Q:II
$2,700
2009-2015
+42%
$2,600
$2,500
$2,602
$2,436
$2,401
$2,400
$2,300
$2,200
$2,100
$2,000
$1,900
$1,830
$1,800
$1,700
Source: Rental Jungle
Dukakis Center for Urban & Regional Policy  www.northeastern.edu/dukakiscenter
$2,465
With Prices & Rents Rising …
Why doesn’t Supply catch up with
Demand?
The $64,000 Question …
With Prices & Rents Rising …
Why doesn’t Supply catch up with Demand
With a $640,000 Answer!
For a 2,300 sq.ft home
Cost of Housing Development
A brand new analysis of the cost of
building Housing Stick Built on Platform
115 Housing Developments
Dukakis Center for Urban & Regional Policy  www.northeastern.edu/dukakiscenter
For a 1,200 Square Foot Urban Project
with 30 units – Per Unit Costs
• Construction Costs
$190,000
• Land Acquisition
$ 49,000
• “Soft” Costs
$ 35,000
• Development Fees
$ 23,000
• Financing Costs
$ 20,000
• Site Preparation
$ 10,000
• TOTAL COSTS
$327,000
Dukakis Center for Urban & Regional Policy  www.northeastern.edu/dukakiscenter
Ted William’s House
39 Foster St. - Allston-Brighton
Dukakis Center for Urban & Regional Policy  www.northeastern.edu/dukakiscenter
Ted William’s House – 1940’s
39 Foster St. - Allston-Brighton
3,721 Square Ft with 2 bedrooms
& a single bath on each floor
Dukakis Center for Urban & Regional Policy  www.northeastern.edu/dukakiscenter
Ted William’s House – 1940’s
39 Foster St. - Allston-Brighton
Dukakis Center for Urban & Regional Policy  www.northeastern.edu/dukakiscenter
Ted William’s House
39 Foster St. - Allston-Brighton
Cost to Develop Today
@ $275/sq.ft.
$1,018,000
Dukakis Center for Urban & Regional Policy  www.northeastern.edu/dukakiscenter
Average Total Development Costs per Square Foot by
Number of Units in Development, Massachusetts
$300.00
$263.02
$259.19
$250.00
$247.50
$200.00
$185.07
$164.28
$150.00
$100.00
$50.00
$-
<30
30-50
51-100
101-150
Source: Dukakis Center Analysis
Dukakis Center for Urban & Regional Policy  www.northeastern.edu/dukakiscenter
151+
Toward a New Housing Policy
Dukakis Center for Urban & Regional Policy  www.northeastern.edu/dukakiscenter
Dukakis Center for Urban & Regional Policy  www.northeastern.edu/dukakiscenter
Dukakis Center for Urban & Regional Policy  www.northeastern.edu/dukakiscenter
Thank You