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As Affordable Housing Shrinks, Where Can Families Live?

In many urban centers, families are finding themselves priced out of the market for housing large enough to accommodate them. Some cities are trying to fix the problem, but it’s not easy.

Boston's classic triple-decker homes have long been an affordable choice for middle-class families. Now that's changing.
(FlickrCC/Blake Gumprecht)
For more than a century, Boston’s iconic triple-deckers have served as inexpensive housing for families of modest means striving to secure a place in the middle class. One of these triple-deckers is currently home to Gosia Tomaszewska, who lives with her husband and 1-year-old daughter on the bottom floor of a house in the Brighton neighborhood. She loves it there and would like to stay. But the family is running out of room, and they’re having trouble finding a place that meets their needs.

Just about every month, Tomaszewska and her husband hold a conversation about whether they’ll have to move. “We’re in limbo,” she says. “Ideally we’d like to stay in the neighborhood, but I don’t think it’s realistic.” As recently as a year ago, Boston real estate brokers were still able to find properties matching the family’s criteria. These days, Tomaszewska says, there is scarcely anything in their price range.

For the typical triple-decker unit, sale prices have soared 85 percent since 2009, according to the Dukakis Center for Urban and Regional Policy at Northeastern University. Many families can’t afford to rent either, as a large share of the cheaper units have been snapped up by college students and unmarried millennials living in groups.

Housing costs are climbing rapidly in neighborhoods all over Boston, and city living is now an idea that’s out of reach for many young families who would otherwise prefer to remain. “As the core has become strong, the economy is attracting lots of young people,” says Barry Bluestone, the Dukakis Center’s director. “It’s been driving up home prices, and a portion of working families have had to relocate.” It’s not just Boston. Other pricey cities have experienced similar consequences of high housing costs.

Governing compiled data gauging the extent to which middle-income family-sized housing is available in the nation’s 25 largest cities. For each city, we calculated the amount that families earning the local median family income could afford to spend on housing and utilities without exceeding the standard 30 percent of their earnings. Data provided by the real estate website Trulia depicts a wide affordability gap between the hottest urban centers and the rest of the country. In the top 10 most expensive cities, an average of just 17 percent of all home listings have three or more bedrooms and are affordable. That compares to a much higher 63 percent of listings in other cities. The outlook isn’t any better for families who rent. On average, more than half (52 percent) of renters in all cities reviewed already spend more than 30 percent of household income on gross rent costs, according to the latest Census estimates, and only a small fraction of rentals are big enough to accommodate larger families.

Booming cities such as Boston have served as magnets for millennials in recent years. Countless surveys suggest that this demographic prefers living in cities to distant suburbs. But whether they can afford to raise families in these cities is a fundamentally different question. “It’s great that we’re having urban revival, but at the same time, we need to be very cognizant and cautious of what it means for our children and the kinds of cities we’re creating,” says Chrystal Kornegay, undersecretary in the Massachusetts Department of Housing and Community Development.

[click_to_tweet]"We need to be very cognizant and cautious of what [urban revival] means for our children."[/click_to_tweet]

The housing crunch isn’t the same everywhere. The fact that inflation-adjusted incomes remain flat, though, has complicated matters even in areas where costs aren’t quite as high. In Boston, median listed rents have increased at an annual rate of 13.2 percent since 2010, while incomes have risen by only 2.4 percent annually, according to a city housing report. In addition, some young professional families who might otherwise be in the market to buy a home or rent in the city are saddled with student loan debt. Nationally, student loan debt jumped 84 percent between 2008 and 2014, according to the credit firm Experian, and research has shown that individuals with student loan debt are less likely to own homes.

As living in Boston has become difficult for middle-income families with children, city leaders have responded, outlining a series of ambitious goals to make housing more affordable. While past efforts have focused on low-income affordable housing, policymakers in Boston and elsewhere are taking a newfound interest in middle-class families who are priced out of cities. “We’re talking,” Kornegay says, “about new tools and ideas to help families that we haven’t traditionally been helping before.” 

Each city is dealing with its own unique set of issues, and the supply of affordable, family-sized housing varies greatly. On one end of the spectrum are cities such as Los Angeles and San Francisco, where barely 1 in 10 homes with three or more bedrooms is affordable at 30 percent of the area’s monthly median family income. More than half of larger homes are affordable in the majority of cities reviewed, and in Memphis and Indianapolis, for example, median-earning families can afford 93 percent of three-or-more bedroom units. In many of these cities, however, affordable homes are concentrated in high-poverty neighborhoods where prospective homebuyers might balk at living.

In Boston, the problem takes a somewhat different form: An adequate supply of large homes exists, but these homes are not housing families with children. Instead, because there’s a shortage of studio and one-bedroom apartments, groups of singles are pooling their resources and outbidding families for desirable larger units. “If we could only put everyone in the right-sized unit, we would be in good shape,” says Sheila Dillon, director of Boston’s Department of Neighborhood Development. Part of the pressure on the market in neighborhoods like Brighton stems from the large number of college students who attend nearby schools. A city ordinance prohibits five or more unrelated students from living together off campus, but while inspections are conducted periodically, the ordinance is difficult to enforce. 

Further compounding matters is Boston’s growing senior population. Many are electing to age in place. The out-migration rate of seniors fleeing to warmer climates has declined, and one city report noted that the number of seniors moving into Boston largely offsets the number moving out. Many still reside in larger homes more suitable for younger families with kids. If they do opt to sell their homes, they’ll often receive the best offers from investors planning to split them up into rentals, a particularly persistent problem in areas near college campuses. It’s important, Kornegay says, that developers not break up four- and five-bedroom properties into smaller apartments, since homes of that size are no longer being built. 

Steven Cohen, who heads a Boston real estate firm, sees a few different scenarios playing out. Families can reside in a city core if they’re willing to make do with a tiny space. Alternatively, they can acquire more space by accepting a longer commute from a relatively close-in neighborhood or, in some cases, save money by moving to a less desirable neighborhood with a higher crime rate. But many opt for the more distant suburbs. In the Boston area, families’ searches for affordable housing have played a role in reshaping places like Jamaica Plain, an ethnically diverse community that was a bargain a decade ago but now is more difficult to afford. Meanwhile, formerly troubled suburbs such as Chelsea and Everett have experienced the arrival of residents moving out of the city in search of more affordable housing.

Barriers to finding a home are steepest for families at the lower end of the middle-income range. These families may be eligible for federal housing assistance in the form of vouchers or tax credits. However, with limited funding, they’re unlikely to receive any assistance once they earn more than 50 percent of an area’s median income. The Trulia listings data indicates an especially bleak outlook for this segment of prospective homeowners. Households earning 75 percent of median family income who pay 30 percent of income on housing can afford less than half of the homes with two or more bedrooms in the majority of reviewed cities, and fewer than 1 in 5 homes in nine of the 25 cities. 

Families burdened with high housing costs can’t spend as much money on food, health care and other basic necessities. City dwellers can find more affordable options by forgoing larger spaces, but they risk adverse health consequences. Research has linked overcrowding -- commonly defined as more than two persons per bedroom -- to greater risk of injury, higher infection rates, depression and various child development problems. 

Dr. Megan Sandel, who researches this issue for the Boston-based Children’s HealthWatch, says she’s increasingly seeing families moving more than twice per year -- another form of housing insecurity -- while overcrowding remains “stubbornly high.” About one-third of low-income families with children under age 4 who visit Boston Medical Center’s emergency department experience overcrowding in their homes, according to her research. 

In part because of differences in the housing stock, the population of children varies greatly from city to city. A mere 18 percent of households have children under 18 in San Francisco, the lowest share in any large city, according to 2014 Census estimates. Seattle and Washington, D.C., report similarly low numbers of kids. Stroller sightings are more common in cities such as Charlotte, N.C., and Milwaukee, where children reside in about a third of all households. As one would expect, families in more densely populated cities with pricier housing tend to have fewer children. 

Some cities are actively seeking to boost the stock of affordable family-sized units. But it’s not easy to do. Much of the strongest demand for central city housing right now is in the rental market, as homeownership rates have dropped to historic lows, driving up rents. The National Multifamily Housing Council (NMHC) estimates this year will be the first since the 2008 economic downturn when enough rental units (300,000 to 400,000) are built to keep up with the higher demand. But relatively few of those new units are large enough to accommodate a family of four.


Building in sought-after urban cores poses challenges for developers. For one, land acquisition typically accounts for 20 to 25 percent of project costs in urban areas, compared to just 10 percent in the suburbs, according to NMHC’s Dave Borsos. Labor expenses also tend to run higher in the city. With demand for smaller-size rentals as high as it currently is, there’s not much incentive for developers to build anything but studios, one-bedrooms and a limited number of two-bedroom units. Data compiled for Governing by the real estate analysis firm Axiometrics indicates that, on average, only 5 percent of market-rate rentals in larger cities have three or more bedrooms.

Inclusionary zoning ordinances require or encourage developers to include affordable housing units in new residential developments. These laws have not, however, incorporated requirements for larger units with more bedrooms. Alan Mallach, a senior fellow at the Center for Community Progress, says adding such a provision is legally feasible. But it wouldn’t ensure that families, rather than groups of single individuals, end up living in a unit. Taking the extra step of mandating the types of occupants would go beyond what’s generally considered possible, Mallach says. A more likely path is one that encourages the development of family housing via tax credits or abatements.

Still, incentivizing developments for middle-income families creates a political and ethical dilemma for cities. Keeping families within the city limits yields numerous benefits. On the other hand, low-income families living in poor housing conditions are more in need of scarce resources. “There’s a compelling argument to do both,” Mallach says. “You want to help people in need, but also want to move cities in a stronger direction economically.”

In Boston, city leaders are pursuing a number of strategies aimed at providing more housing options for middle-class families. Last year, Mayor Marty Walsh outlined a long-term housing plan that calls for the construction of 53,000 new housing units by 2030. One key component of Boston’s strategy encourages local colleges to build more dormitories that, in turn, would ease the demand for larger rental properties. A new database allows the city to track where students are living. Allocating more money for senior housing is similarly expected to free up additional single-family homes. To accelerate new construction projects, the city has also streamlined its permitting process.

One mixed-use development in line with the mayor’s plan, set to occupy prime real estate near Boston’s North Station and TD Garden sports arena, is being hailed as the most significant downtown workforce housing project in decades. Incomes of eligible renters in the 239-unit residential complex will range between 30 and 165 percent of the area median, and 10 percent of the units will have three bedrooms. 

To help pay for the development, Massachusetts is providing a 4 percent tax credit and an affordable housing development award. Developers worked with the city on a long-term tax stabilization plan tied to a fixed percentage of the development’s annual gross income that increases over time. This was key to securing lenders to underwrite the development. “If we didn’t have it, we wouldn’t be able to do the deal,” says Ted Lubitz, who oversees the project for the real estate firm Related Beal.

While the project -- built on deed-restricted land -- can’t be replicated in its entirety, the attention to working families could serve as a model for future developments. “A lot of developers are reactionary and will wait for things to come out and plan within the rules given to them,” Lubitz says. “We need to impress upon the development community that they need to be more proactive to help the city and state solve this issue.”

Bluestone of the Dukakis Center has proposed another novel idea for freeing up more family-sized housing -- what he calls “millennial villages.” These apartment complexes would house both students and young professionals, incorporating a range of different-sized residential units, shared common spaces and ground-floor retail establishments. By moving to one of these villages, young singles would free up larger units elsewhere for families seeking to stay in the city. 

Regardless of how cities address the challenges of housing affordability, they’ll need partners. “Everyone recognizes that keeping families in a city is a desirable outcome,” Boston’s Dillon says. “[But] keeping a population in a city doesn’t just happen; it takes a lot of planning, hard work and partnerships.”  

Review data assessing housing affordability in each city

Mike Maciag is Data Editor for GOVERNING.
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