Rising home prices and rents in Massachusetts could continue a trend in job losses and out-migration unless more housing and particularly more affordable housing is made available, according to a reported prepared by Barry Bluestone, director at the Center for Urban and Regional Policy at Northeastern University.
The report, commissioned by the Massachusetts Association of Realtors trade group, notes that the total population in Massachusetts shrunk by about 19,000 from July 1, 2003, to July 1, 2005, according to U.S. Census Bureau statistics. And the state had a 5 percent drop between 2001 and 2004 in the population of those 25-34 – while the nation as a whole saw a slight rise in population for this age group.
Those leaving the state are going to Florida, New Hampshire, California, Arizona, North Carolina and Washington, among others.
“What we know from a new analysis of living costs is that out of the 385 metropolitan areas in the United States (and 49 rural communities), Boston is the single most expensive place to live for young working families,” the study reports, and this is based on a family budget formula developed by the Economic Policy Institute research center.
The institute found the monthly housing cost for a family of four in Greater Boston is about $1,266. And while family housing costs in the San Francisco area are an estimated $1,539 per month, childcare, taxes and healthcare costs are lower in the San Francisco area, according to the institute.
The report, “Sustaining the Mass Economy: Housing Costs, Population Dynamics, and Employment,” available in draft form at the center’s Web site, suggests that there is correlation between rising housing costs and job losses in some markets. For example, employment declined 4.9 percent from 2000-04 in Boston.
“Other high-cost housing areas also saw employment loss. San Francisco, with the highest cost of housing in the nation, lost 10 percent of its employment base; San Jose (lost) 15.4 percent.”
Job losses were also reported in such other high-cost housing markets as Boulder-Longmont, Colo.; Stamford-Norwalk, Conn.; New York City; Oakland, Calif.; and Los Angeles, according to the draft report.
There are several examples, though, of communities with below-average housing prices that experienced job losses, such as the “Rust Belt” communities of Youngstown, Ohio; Flint, Mich.; Ft. Wayne, Ind.; and Binghamton, N.Y.
But adjusting the data to cancel out the job losses specifically related to the manufacturing industry, the report finds that “housing costs and taxes are both significant … in explaining why some (metro areas) have seen growth in employment in the first half of the decade and others, like Greater Boston, have experienced loss.”
The report also suggests that while healthcare, childcare and taxes “have something to do with migration patterns, housing costs have by far the greatest influence. Simply put, we now have strong statistical evidence that the dramatic rise in housing prices and rents since the 1990s is now taking its toll on jobs and the size of the working population in (Massachusetts).”
The report also concludes, “Nationwide, the population is moving away from high-cost-of-living cities and suburbs to those with lower housing costs — and lower living costs in general — and jobs are going with them. Given the demographic data for Massachusetts, this is especially worrisome for the population segment declining the fastest is comprised of young working families.
“We also found some evidence suggesting that if the employment and migration trends were to deteriorate further, we could experience another sharp decline in housing prices — as rising out-migration could lead to rising housing vacancy rates.”
Increasing the supply of housing and developing affordable housing for young working families “may be the best economic development strategy the state could undertake,” the report also concludes.
The final version of the study will be released today will be released today at the Boston Federal Reserve Bank as part of a conference on housing. The Massachusetts Association of Realtors on June 15 will host a housing advocacy summit titled, “Housing Supply: the Quiet Job Killer” at Northeastern University in the Curry student center. State and local government officials, housing advocates, and environmentalists are expected to attend to discuss the study’s findings and possible solutions.
