Idea for fixing the housing shortage

Anyone want to summarize? The globe won’t let me pay for the individual article, and I’m not creating a subscription to read this one story.
A few points from the article:

- New units cost 500 to 600k per unit to build, with high rises closer to Boston costing even more
- Even with zoning reform, costs to build remain high, there is a limit to rents that the market will bear to recapture costs, eventually people leave the area for cheaper housing (my own observation - this seems to be corroborated by significant out migration from the high cost northeast and west coast to the lower cost south)
- in recent years, construction costs have increased twice as fast as rents, straining the numbers which makes production of new housing financially work
- Massachusetts probably needs 25k new units per year, so far this year through the end of Oct. Mass has produced 10k, next year will be even lower
- land costs for multi family construction inside Rte 128 runs around 40k to 80k per unit
- larger projects use union labor; labor earns about $72 per hour (wage and benefits); about 1/3 higher than non union labor, Trade reps state they are more productive and reliable than non union workers
- hard costs, labor and building material amount to 75% to 80% of total cost of building
- developers take 2 to 3% to cover their expenses and staff
- complicated permitting process delays process and adds to costs due to financing carrying costs etc.
- green energy codes add 5% to 10% of cost, costs may be recouped over long term but create high up front costs
- affordable housing mandates add cost; Boston now requires 17% affordable plus an additional 3% set aside for section 8 rental vouchers, this was recently increased from 13%
- developers typically finance half of costs, equity partners invest the other half but expect returns. Pre covid investors wanted 4% return; now they are getting higher than those returns on safer investments like treasury bonds; investors now need 6 to 6.5% return to invest money in higher risk housing; this increases cost of production
- some ideas to lower costs that were mentioned in the article, lower or eliminate parking demands, streamline permitting/zoning, property tax breaks to spark investors to come back into the market. Modular construction can help lower costs in some instances; the article did not mention anything about adjusting green energy or affordable housing mandates to spark demand. I think some other cities have adjusted or are considering adjusting affordable housing mandates given that very little housing is being built for economic reasons;
- developers are worried, lots of projects/cranes currently ongoing, but when this current wave of housing wraps up, the next wave of housing production is going to cost quite a bit more than what's being constructed today.

More details in the full article: https://apps.bostonglobe.com/2023/1...tion-costs/?s_campaign=bdc:globewell:trending
 
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I’ve been thinking about the political incentives behind green building mandates a lot - and my layman’s assumption is that dense housing in urban centers is so much better for the environment no matter the code. Forget natural gas, these places could be running exclusively coal fired ovens and it’d be net positive impact for people to be living closer in an urban environment (hyperbole).

If the buildings are more expensive from these regulations, and more people just move to southern sprawl as a result, the system as a whole is not improving. We may get to say we have [x| green buildings in 2050 but the policies just shifted the problem elsewhere and canceled out the benefit. The political incentive here seems to be: receive high ranking/award/designation from [insert multinational organization] so that applicable politician has a green bona fide.

As someone involved in “green” advocacy i puts me in a difficult spot and I find economic realism/ system level conversations difficult to broach with others in the space.
 
I’ve been thinking about the political incentives behind green building mandates a lot - and my layman’s assumption is that dense housing in urban centers is so much better for the environment no matter the code. Forget natural gas, these places could be running exclusively coal fired ovens and it’d be net positive impact for people to be living closer in an urban environment (hyperbole).

If the buildings are more expensive from these regulations, and more people just move to southern sprawl as a result, the system as a whole is not improving. We may get to say we have [x| green buildings in 2050 but the policies just shifted the problem elsewhere and canceled out the benefit. The political incentive here seems to be: receive high ranking/award/designation from [insert multinational organization] so that applicable politician has a green bona fide.

As someone involved in “green” advocacy i puts me in a difficult spot and I find economic realism/ system level conversations difficult to broach with others in the space.
I think you raise important macro economic points. Personally, I have concerns for Boston these days. I feel Boston is at an great inflection - work from home changes have changed the economic playbook for Boston and we have very high housing costs. Boston should have more carrot and less stick these days particularly when it comes to housing production. Unfortunately, I don't think City Hall has yet to get that message and has been trending the opposite way. From my cursory review, I think we are outliers nationwide when it comes to the heavy stick approach. For example, I think NYC goes with the carrot approach giving density bonuses to developers if affordable housing is incorporated.
 
In a general sense I think that regional rail plus rail sprawl could make a serious dent in the housing shortage. If you can make 495 45 minutes from Boston then it’s about as far by transit as Watertown, that would open up a lot of land for dense development. Plus much of it would be greenfield which should be cheaper.
 

Boston’s Chief of Planning Arthur Jemison on the future of affordable housing​

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“In the city of Boston, there is one agency that might have more power than anything else over what you see around you: the buildings, parking lots, apartments and parks that shape your neighborhood.

That agency is the Boston Planning and Development Agency, also known as the BPDA. And for roughly 70 years, it’s operated separately from the rest of city government. But Mayor Michelle Wu wants to change that, bringing it all under one roof, under one person.

“What it will change primarily is it will allow there to be the oversight of democratically elected officials through the Boston City Council, something that hasn’t been part of the way the agency’s operated for almost those entire 70 years,” said Arthur Jemison, the city’s chief of planning. “And there’s a level of trust that comes from knowing we have the oversight of the elected officials of the city, that isn’t the same basis of the heritage and history of the agency as we are currently constituted.”

The BPDA is at a crossroads with this ordinance being considered by the City Council. The city itself is at a crossroads too, with some major development in recent years, alongside skyrocketing housing prices and changing demographics in Boston.

“One of the big challenges we have is not just a challenge for Boston, but it’s a challenge even outside of the city, which is creating a predictable system of development that allows the things that we need desperately — workforce housing and affordable housing — to be as of right, as we say in the development industry,” Jemison said.

“As of right” means that development can fall under existing zoning or bylaws, without requiring special permits or waivers to move forward.”

“Right now, that sort of network and system of rules and sort of the path of a successful development project are very complicated,” Jemison said. “And they’re much more complicated here than they are in many other parts of the country.”

Jemison cited an initiative called Squares and Streets, in which the city is trying to create zoning that allows for more housing in areas of the city that have more accessible public transit.

Building more housing around transit centers in Boston is something that most transit advocates and affordable housing advocates would celebrate, but it’s also something that sometimes spawns stiff opposition from people who don’t want to see their neighborhoods changing.

“I think that there’s got to be a way, and I think we’re trying to show the path to do it,” Jemison said.

In his experience, he said, residents are most concerned about unwieldly processes over which they have no control or opportunity for input…”

https://www.baystatebanner.com/2024...-jemison-on-the-future-of-affordable-housing/
 

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