A new report from UMass Amherst and Springfield-based housing agency Way Finders looks at an affordability crisis for renters and homeowners in Western Massachusetts.
The report from the UMass Donahue Institute for Economic and Public Policy Research is titled Building Homes. Building Futures. Commissioned by the Springfield-based housing agency Way Finders, it aims to be the most comprehensive look yet at the housing and rental markets in the four Western Massachusetts counties.
The Berkshires are the newest addition, being absent from previous housing reports in 2021 and 2022.
It highlights a number of key issues driving an affordability crisis for both renters and homeowners in the region — from stagnant wages to an increase in short-term rentals, like Airbnb or VRBO. The report also zeroes in on one problem in particular: a lack of housing supply.
"When we look at the data, we estimate that by 2035 we're going to need an additional 17,000 housing units to meet current and future demand for housing in our region," explained Kerry Spitzer, senior research manager for the UMass Donahue Institute. "We need to build more homes, but we also need to rehabilitate homes, preserve existing housing, and really double down on making sure that we have enough housing for everybody in the region."
The lack of housing supply creates an acute pain point in the market, one that ripples through the region and creates more problems further down the housing pipeline. Low supply means that housing prices go up, as renters and prospective homeowners squabble over what few properties are available. That can end up squeezing low-income residents out of the market entirely, possibly leading to homelessness.
The report finds rents across the region have risen an average of 30% since 2021, with an increase in evictions — most commonly for non-payment of rent. Around half of all renters across Western Massachusetts are considered cost burdened: they pay more than a third of their income on housing. That number gets worse for those with lower incomes: 78% of renters who make between $10,000 to $19,000 a year are considered cost burdened. The increased costs disproportionately impact nonwhite residents.
"What we see is that white renters are less likely to experience cost burden, and black, Hispanic, Latino renters are much more likely to experience cost burden," Spitzer said. "And this is driven by issues around racial inequality and the racial wealth gap."
Also putting pressure on the already-limited regional housing supply is an increase in investor activity and short-term rentals. In Springfield, around 35% of all real estate transactions from 2004 to 2019 were by investors, defined as those who purchased three or more properties within five years, or spent at least $3.45 million on properties between 2004 and 2023. Short-term rentals like Airbnb also increased by 40% region-wide between 2017 and 2023, primarily in the Berkshires, where tourism is a larger industry. These types of transactions represent an additional layer of competition for local residents when it comes to securing a home.
The report suggests that the most effective solution to the various problems plaguing the regional housing market is to increase supply — issue more building permits to local developers, reduce regulatory red tape, and invest state resources into widespread housing development. It echoes the first-ever statewide housing plan put forth by the Healey administration earlier this year; both Spitzer and Way Finders CEO Keith Fairey were involved in its creation.
That plan states that Massachusetts needs to build at least 222,000 new housing units across the commonwealth in the next 10 years. To that end, the Healey administration ended parts of the state's environmental review process for housing projects in early September.
At a panel discussing the Western Mass. housing report, UMass Donahue Institute Director Mark Melnik said that increasing both the region and the state's housing supply is going to mean answering tough questions about the relationship between economic development and environmental regulation.
"There's a bit of an intellectual civil war going on on the policy left about these kinds of things that are maybe somewhat cross-purpose," Melnik said. "Obviously any particular policy that folks have an issue with, or that would have been rolled back to some degree, can be quibbled with. And I think that that's completely fair in terms of conversation. But I do think that we have to get back into a mindset of how government is producing outcomes for the world that we live in now."
Included with the release of this report was an online data visualization tool, which allows the data to be sorted by county, city, or town. It also links data on housing development to the potential economic impact, and estimates how new housing would impact local services, like water and sewer or public safety.
