Understanding Affordability

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Viewing Affordability in New Ways
Flush with the success of its first affordability research, the Center for Real Estate hosted its first annual housing affordability conference last May. More than 120 people, including planners, developers, local government officials, nonprofit-housing representatives, and bank executives, were on hand to learn about two more HAI research projects. If attendees hoped for another breakthrough perspective, they weren't disappointed.

The center unveiled a prototype index, the Rental Housing Affordability Index, that tracks the availability of low-priced housing throughout Greater Boston. The index assigns a numerical score to each town by evaluating the availability of affordable housing against other criteria such as access to employment.

Affordable-housing lenders can use this index as a guide to target where investments will provide the most benefit to the region. Developers can use it when considering where to build and in making their cases before planning boards. The data can also help policymakers, such as the Massachusetts Department of Housing and Community Development, in evaluating regional policies.

Recognizing the value of having affordable housing in proximity to jobs in the Boston region, MassHousing, a quasi-public agency that provides financing for affordable rental housing projects, and the Federal Home Loan Bank of Boston provided funding for this research. Pollakowski says that indices based on other income brackets are scheduled to be released in coming months.

"Having an affordability index that is informed by access to employment may create a different series of decisions," says Thomas R. Gleason, executive director of MassHousing. "More information is needed on housing in this market, both subsidized and unsubsidized, to make good lending decisions," he says.

Another study presented at the May conference analyzed land use in the Boston area between 1997 and 2001. Lynn Fisher, an assistant professor of real estate in the Department of Urban Studies and Planning, and her colleagues studied the size of lots for 34,000 new single-family detached homes built during that time.

Their research showed that median lot size was nearly an acre, unusually large by both historical and national standards. The implications are clear. "By limiting the supply of available land for development, larger lot sizes constrict the future supply of job-accessible housing in all price ranges," Fisher says.

Fisher is quick to note that affordable housing can be found in a variety of ways. "People in the real-estate industry tend to get fixated on new construction," she says, "but it's important to remember that renting is a perfectly legitimate way to afford housing. Also, lower-cost housing is typically older housing. There is usually a large stock of older houses and, consequently, renovation is an important tool for increasing affordability that should not be overlooked."

Sometime this year, the initiative expects to produce a report on the extent to which workers such as nurses, teachers, police, and firefighters are able to afford housing in the communities they serve. "In fact, we don't really know who those workers are, what kind of incomes they have town for town and household for household," says Fisher. "So, it's unclear how dire their situation is."

But HAI will soon bring some clarity. Poring over detailed census data, a squadron of graduate students spent last summer creating a profile of those workers and their income distribution in the same 161 towns covered by the Rental Housing Affordability Index. Like all the research being conducted by HAI, it exemplifies a willingness to look at the problem of affordability from all perspectives and in fresh ways. That makes sense, because--as HAI personnel will tell you--the problem of affordability is being redefined, all the time, by a host of factors.