What Does “Affordable” Mean?
Traditionally, housing sales have been viewed as an economic engine. But in Massachusetts, housing sales–with the exception of condominiums–were flat last spring. And the area’s population is shrinking. Census Bureau figures released last June showed that between April 2000 and July 2004, nearly 20,000 people, 3.4 percent of the city’s population, left Boston.
Although no single factor can explain this migratory trend, the price of housing–the median cost of a single-family home in Massachusetts is closing in on $400,000, according to the Massachusetts Association of Realtors–is certainly a major issue.
Over the same period, more Americans moved to the South and West, where all 10 of the nation’s fastest-growing cities larger than 100,000 people are located and where housing is far more affordable. During the four years that Boston shrank, the population of Gilbert, AZ, the nation’s fastest-growing city during that time period, increased by nearly 50 percent. Yet even that growth did not pump housing prices up to the rarefied levels of Boston.
The trend toward unaffordability is of such grave significance to the region that MIT’s 22-year-old Center for Real Estate introduced a special program in 2004 called the Housing Affordability Initiative. Its purpose is to better understand the issues that are contributing to the affordability problem and, by clarifying an often muddy picture, help the real-estate industry to address them.
That means research. During 2003, Henry Pollakowski, director of the initiative, and his colleagues spent a lot of time talking with industry professionals to learn what research was being done, what research needed to be done, and how the center could help solve the affordability problem. The first step was to clarify what “affordability” actually means.
“It’s nearly impossible to explore ways to solve the problem if the scope of the problem is not clear,” says Pollakowski. “Most of what we’re doing is about getting facts straight. We’re attempting to create a more economically meaningful definition of affordable that is sensitive to the many types of households, whether they rent or own, and the location of affordable units relative to jobs.”
Mark Baranski, SM ‘02, senior vice president with the Overland Development Group, who was instrumental in the development of HAI, says, “Affordability is a multidisciplinary question. There are no simple answers, but MIT has traditionally been a nexus where different disciplines interact.” The initiative, says Baranski, “represents a willingness to invent new ways to get the answers the industry needs.”