Hope For Housing Affordability On The Horizon

Affordability has become one of the biggest concerns facing Massachusetts residents. A main driver? The state’s skyrocketing housing prices.

Home prices are climbing faster than incomes, while limited supply of housing has made it increasingly difficult for residents to find places to live that don’t break the bank. 

But several new ideas –  including legislation and a proposal headed to voters this November – could help the state reverse this troubling trend.

Rising Home Prices and Limited Supply Drive Unaffordability

According to Zillow’s home value index, median home prices in the Bay State have jumped 78% over the last decade. Starter homes in particular have increased even faster, spiking by 94%. Both are growing faster than residents’ personal income in the same time frame, according to the U.S. Bureau of Economic Analysis.

MOA’s recent survey of more than 1,000 former Massachusetts residents found that nearly half (49%) considered rent and housing prices as their biggest cost-of-living challenge while living in the Bay State.

Analysis by the Pioneer Institute also found that last year, Massachusetts’ new home building permits dropped 13% over 2024 – representing the lowest number of new home permits in over a decade. Limited supply contributes to housing affordability concerns – because greater competition for existing units and limited access to new starter homes drives prices up for those looking to buy.

Housing Costs Are Pushing People Out

For some, those pressures have become significant enough to push residents to leave the state altogether. 

One-third of former residents cited rising housing and rent prices as a top reason they left Massachusetts, among other primary reasons like high taxes and general high cost of living.

Potential Solutions to Housing Affordability 

Currently, many local communities have steep mandates on how big a lot must be to build a home on it. As reported by the New York Times, in some towns, these minimum requirements can be as high as 80,000 square feet per lot for a single home – roughly the size of a professional soccer field. 

Reducing lot size requirements could pave the way for more affordable housing. This change means new homes would not be required to include so much land – which drives home values and prices up – increasing supply and affordability of starter homes in Massachusetts. A proposal to do just that will appear before voters this November.

Pioneer Institute’s housing economist Andrew Mikula estimates this could generate up to 6,000 new homes built every year. This, on top of the state’s existing efforts to boost new home construction, could be a game-changer for young residents and families looking to buy their first home, or even older residents looking to downsize. 

State lawmakers have also proposed a handful of housing reforms in the latest House and Senate versions of the Governor’s economic development bill. These provisions include:

• Expanding allowance of religious institutions to build multi-family housing on their property without special zoning permits;
• Supporting conversion of commercial property and formerly state-held property into residences – including through new grant funding;
• Creating standardized rules for review of new site plans, to streamline the process where local planners confirm a project abides by local regulations; and
• Allowing two-family housing on residential lots without special permits.

Lawmakers in both chambers must agree on a final combined version of the bill before it can go to the Governor for signature.

These proposals come after another attempt to address housing affordability through rent control failed to reach the ballot. Previous MOA analysis shows that rent control is not a feasible way to make housing more affordable. In fact, rent control can discourage new housing investment, reduce the quality and availability of housing, and limit renters’ mobility. In some cases, these policies can even contribute to higher rents by further constraining housing supply. 

Rather than restricting prices on the housing that already exists, reducing barriers to new construction and making it easier to convert unused buildings into residences could help expand the number and variety of lower-cost homes available to Massachusetts residents. 

Conclusion

The affordability challenges residents face go beyond housing costs. But we know this ever-increasing barrier-to-entry for home ownership is weighing on Bay Staters, and even pushing some to move elsewhere. If we don’t reverse this trend, it will have a drastic impact on our state’s competitiveness long-term. After all, companies looking to invest and expand in Massachusetts can only do so if their workforce can afford to live here. 

If Massachusetts wants to remain a place where people can afford to put down roots, expanding housing options is imperative.