Comprehensive Housing Market Analysis for Boston, MA
C O M P R E H E N S I V E H O U S I N G M A R K E T A N A LY S I S
Boston, Massachusetts
U.S. Department of Housing and Urban Development Office of Policy Development and Research As of August 1, 2016
Windham Connecticut
Newport
Hillsborough New Hampshire
Rockingham
Essex
Middlesex
Worcester
Massachusetts Rhode Island
Providence
Suffolk Norfolk
Bristol
New London
Kent Washington
Massachusetts Bay Plymouth
Barnstable
Housing Market Area
The Boston Housing Market Area (HMA) comprises Essex, Middlesex, Norfolk, Plymouth, and Suffolk Counties in Massachusetts. For purposes of this analysis, the HMA is divided into three submarkets: The Boston-Suffolk County submarket is coterminous with Suffolk County and includes the city of Boston, the North Shore submarket comprises Essex and Middlesex Counties, and the South Shore submarket consists of Norfolk and Plymouth Counties. The HMA is home to 56 institutions of higher learning that enroll more than 250,000 students.
Summary
Economy
Economic conditions in the Boston HMA remain strong. Nonfarm payrolls have increased each year since 2010 and surpassed the prerecessionary high in 2012. During the 12 months ending July 2016, nonfarm payrolls in the Boston-Cambridge-Nashua MA-NH Metropolitan New England City and Town Area (hereafter, the Boston NECTA) totaled more than 2.67 million, after increasing by 42,700, or 1.6 percent, from the previous 12 months. The unemployment rate in the HMA currently is
Market Details
Economic Conditions.......................... 2 Population and Households................ 6 Housing Market Trends....................... 9 Data Profiles...................................... 24
4.0 percent, down from 4.8 percent 1 year earlier. Nonfarm payrolls are expected to increase by 1.2 percent annually during the 3-year forecast period.
Sales Market
The sales housing market in the Boston HMA currently is tight, with a 0.6-percent sales vacancy rate, down from 1.4 percent in April 2010. During July 2016, a 1.8-month supply of single-family homes and a 1.7-month supply of condominiums were for sale in the HMA, down from 2.6 and 2.0 months, respectively, in July 2015 (Greater Boston Association of Realtors [GBAR]). Demand is estimated for 20,550 new homes (single-family homes plus condominiums) during the 3-year forecast period (Table 1). The 3,145 homes currently under
construction and some of the esti mated 49,700 other vacant units that may reenter the market will satisfy a portion of that demand.
Rental Market
The rental housing market in the Boston HMA is slightly tight, with a 4.3-percent vacancy rate, down from 5.8 percent in April 2010. Strong population growth has contributed to the absorption of previously vacant units despite high levels of multifamily production in the HMA since 2013. As of April 2016, the city of Boston was the third most expensive rental market in the United States (Zumper). During the forecast period, demand is estimated for 22,275 new market-rate rental units (Table 1). The 12,550 units under construction will satisfy a portion of that demand.
Summary Continued
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Table 1. Housing Demand in the Boston HMA During the Forecast Period
Boston HMA
Boston-Suffolk County Submarket
North Shore Submarket
South Shore Submarket
Total demand
Sales Units
20,550
Rental Units
22,275
Sales Units
3,400
Rental Units
8,875
Sales Units
11,200
Rental Units
9,750
Sales Units
5,950
Rental Units
3,650
Under construction
3,145
12,550
1,525
5,800
930
4,700
690
2,050
Notes: Total demand represents estimated production necessary to achieve a balanced market at the end of the forecast period. Units under construction as of August 1, 2016. A portion of the estimated 49,700 other vacant units in the HMA will likely satisfy some of the forecast demand. The forecast period is August 1, 2016, to August 1, 2019.
Source: Estimates by analyst
Economic Conditions
The Boston NECTA includes portions of New Hampshire and is somewhat larger than the Boston HMA. This analysis uses the Boston NECTA in the discussion of nonfarm payroll jobs, however, because employ ment data for the Boston NECTA are readily available from the U.S. Bureau of Labor Statistics.
The city of Boston, founded in 1630, is one of the oldest cities in the United States. The city, with its location on the Atlantic Ocean leading into the Boston Harbor at the mouth of the Charles River, began as a center for shipping
Table 2. 12-Month Average Nonfarm Payroll Jobs in the Boston Metropolitan NECTA, by Sector
12 Months Ending
Absolute Percent
July 2015 July 2016 Change Change
Total nonfarm payroll jobs Goods-producing sectors Mining, logging, & construction Manufacturing Service-providing sectors Information Financial activities Professional & business services Education & health services Leisure & hospitality Other services Government Nonreporting sectors
2,631,200 291,700 99,200 192,500
2,339,400 76,600
180,300 450,200 550,900 254,100 100,600 311,600 415,100
2,673,900 299,100 108,900 190,200
2,374,800 77,400
185,200 459,600 564,300 256,300 102,900 309,400 419,300
42,700 7,400 9,700
? 2,300 35,400
800 4,900 9,400 13,400 2,200 2,300 ? 2,200 4,200
1.6 2.5 9.8 ? 1.2 1.5 1.0 2.7 2.1 2.4 0.9 2.3 ? 0.7 1.0
NECTA = New England City and Town Area.
Notes: Numbers may not add to totals because of rounding. Based on 12-month averages through July 2015 and July 2016.
Source: U.S. Bureau of Labor Statistics
and global commerce. By the early 1800s, a significant manufacturing presence, particularly associated with textiles, had developed in the city. The manufacturing sector has been in longterm decline, and the HMA has become increasingly known as a global center for education and health services. The HMA is home to 56 institutes of higher education that enroll more than 250,000 students, which includes world-renowned institutions such as Harvard University and the Massachusetts Institute of Technology. The HMA also is home to highly regarded hospitals such as Massachusetts General Hospital and Brigham and Women's Hospital, which, in 2015, were ranked as the best and sixth best hospitals in the nation, respectively, by U.S. News & World Report.
Following a fast recovery from job losses in 2009, economic conditions remain strong in the HMA, supported by a highly educated and skilled labor force that attracts many employers. During the 12 months ending July 2016, nonfarm payrolls in the Boston NECTA totaled more than 2.67 million, up by 42,700, or 1.6 percent, from the previous 12 months (Table 2). Although
Economic Conditions Continued
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Labor force and resident employment Unemployment rate
job growth remains positive, the rate of job growth is below that of the previous 12 months, as economic growth began to stabilize after recording strong gains during the past few years. During the 12 months ending July 2015,
Figure 1. T rends in Labor Force, Resident Employment, and Unemployment Rate in the Boston HMA, 2000 Through 2015
2,400,000
9.0
2,350,000
8.0
2,300,000
7.0
6.0 2,250,000
5.0 2,200,000
4.0
2,150,000 3.0
2,100,000
2.0
2,050,000
1.0
2,000,000
0.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Labor force
Resident employment
Unemployment rate
Source: U.S. Bureau of Labor Statistics
Figure 2. Current Nonfarm Payroll Jobs in the Boston Metropolitan NECTA, by Sector
Nonreporting sectors 15.7%
Mining, logging, & construction 4.1% Manufacturing 7.1%
Information 2.9%
Government 11.6%
Financial activities 6.9%
Other services 3.9%
Professional & business services 17.2%
Leisure & hospitality 9.6%
Education & health services 21.1%
NECTA = New England City and Town Area. Note: Based on 12-month averages through July 2016. Source: U.S. Bureau of Labor Statistics
Table 3. Major Employers in the Boston HMA
Name of Employer
Nonfarm Payroll Sector
Number of Employees
Partners HealthCare
Education & health services
The Stop and Shop Supermarket Company LLC Wholesale & retail trade
Harvard University
Education & health services
Steward Health Care
Education & health services
Massachusetts Institute of Technology
Education & health services
Beth Israel Deaconess Medical Center
Education & health services
State Street Corporation
Financial activities
Boston Children's Hospital
Education & health services
Raytheon Company
Manufacturing
Boston University
Education & health services
67,600 21,700 18,050 17,325 15,750 12,850 11,700 11,075 11,000
9,950
Notes: Excludes local school districts. The number of employees is the statewide total for Massachusetts. Data include only employers who have operational headquarters in the HMA.
Source: Boston Business Journal
nonfarm payrolls increased by 53,200, or 2.1 percent. The unemployment rate currently is 4.0 percent, down from 4.8 percent 1 year earlier and down significantly from the 7.7 percent recorded during 2010 (Table DP-1 at the end of this report). Figure 1 shows trends in the labor force, resident em ployment, and the unemployment rate in the HMA from 2000 through 2015.
Education and health services is the largest employment sector in the Boston NECTA and, with 564,300 jobs, accounts for more than 21 percent of all nonfarm payrolls (Figure 2). Of the 10 largest employers in the HMA, based on employment numbers for the state of Massachusetts, 7 are in the education and health services sector (Table 3). The sector also has been the fastest-growing sector in the Boston NECTA since 2000, increasing by an average of 10,200 jobs, or 2.2 percent, annually. Figure 3 shows sector growth in the Boston NECTA since 2000. During the 12 months ending July 2016, the education and health services sector led job growth in the Boston NECTA, increasing by 13,400 jobs, or 2.4 percent, from the previous 12 months. Notable developments in the sector include Milford Regional Medical Center, which completed a $60 million expansion in 2016. Employment at many of the local universities also continues to increase to accommodate rising levels of enrollment.
Because of the many institutions of higher learning and world-class hospitals in the HMA, scientific research jobs abound in the Boston NECTA. The professional and business services sector, which includes scientific research jobs, is the second largest employment sector in the HMA.
Economic Conditions Continued
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Figure 3. Sector Growth in the Boston Metropolitan NECTA, Percentage Change, 2000 to Current
Total nonfarm payroll jobs
Goods-producing sectors
Mining, logging, & construction
Manufacturing
Service-providing sectors
Information
Financial activities
Professional & business services
Education & health services
Leisure & hospitality
Other services
Government
Nonreporting sectors
? 40
? 30
? 20
? 10
0
10
20
30
40
NECTA = New England City and Town Area. Note: Current is based on 12-month averages through July 2016. Source: U.S. Bureau of Labor Statistics
The sector had 459,600 jobs during the 12 months ending July 2016, an increase of 9,400 jobs, or 2.1 percent, from the previous 12 months. Recent expansions in the sector include GE Healthcare Life Sciences, which opened a new North American Headquarters in the Boston NECTA on relocating from Chicago in 2015. When fully staffed in 2017, GE Healthcare Life Sciences will have more than 500 scientists working at its headquarters. ORIG3N, Inc., which conducts research on genetically inherited diseases, opened a new headquarters and research facility in the city of Boston in 2016.
The mining, logging, and construction sector benefited significantly from the recent job growth in other sectors. Nearly all of the jobs in the sector are construction related, as strong economic conditions have spurred new residential (single-family plus multifamily) development and created a need for more commercial and office space. During the 12 months ending July 2016, employment in this sector increased by 9,700 jobs, or
9.8 percent, to 108,900. Since 2011, the sector has added an average of 5,600 jobs, an increase of 6.3 percent, annually. Several large projects are ongoing in the HMA, including One Seaport Square, a $600 million mixeduse development; when complete in 2017, it will have 832 residential units and more than 250,000 square feet of retail space in two towers. Another ongoing development is the Boston Landing project in the Brighton neigh borhood of the city of Boston. The project includes the new corporate headquarters of Reebok, which opened in spring of 2015, and a new commuter rail station. A new practice facility for the Boston Bruins professional hockey franchise opens at the site in September 2016, and a luxury hotel is scheduled to be complete in 2018.
The Boston HMA is a major tourist destination because of the presence of historical attractions, including the Old North Church, Bunker Hill, and the U.S.S. Constitution. Tourism had a $13 billion impact on the HMA during 2014 (the latest data available;
Economic Conditions Continued
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Massachusetts Office of Travel and Tourism). The number of jobs in the leisure and hospitality sector increased by 2,200, or 0.9 percent, during the 12 months ending July 2016, following an increase of 5,700 jobs, or 2.3 percent, a year earlier. This sector accounts for nearly 10 percent of all nonfarm payroll jobs in the HMA. Several new hotels have contributed to recent job growth in the sector. The Aloft Boston Seaport, a 330-room hotel, and the Element Boston Seaport, a 180-room hotel, opened in 2016; both are near the Boston Convention Center.
Although economic conditions remain generally positive, not all employment sectors are increasing. During the 12 months ending July 2016, two employment sectors recorded job losses. The government sector declined by 2,200 jobs, or 0.7 percent, the result of a decline in state and local government employment. Nonfarm payrolls in the state government subsector declined by 1,600 jobs, or 1.9 percent, as the state government recently offered an early retirement package as part of an effort to reduce the workforce. Local government employment during the 12 months ending July 2016 totaled 191,300, a decline of 600 jobs, or 0.3 percent, as a declining number of people younger than age18 has slightly reduced the number of grade school teachers needed locally.
The only other sector to decline during the 12 months ending July 2016 was the manufacturing sector, which lost 2,300 jobs, or 1.2 percent. Since 2000, the manufacturing sector has declined continuously by an average of 6,900 jobs, or 2.8 percent, annually. For perspective, in 1990, the sector had 358,700 jobs, accounting for 16 percent of all nonfarm payroll jobs in the HMA. Currently,
the manufacturing sector includes 190,200 jobs, or only 7.1 percent of all nonfarm payroll jobs. Job losses in the sector have occurred each year since 1997, a trend that is expected to continue for at least the next 3 years.
The 2000s were a period of change in the HMA, as the local economy withstood two national recessions and continued to transition to a more knowledge-based economy. The late 1990s were a period of nonfarm payroll growth in the Boston NECTA, as the dotcom boom increased the demand for highly skilled workers; that demand spilled over into 2000, when nonfarm payrolls increased by 62,900, or 2.6 percent, but job growth slowed during 2001 to 2,800 jobs, or 0.1 percent. During 2001, the dotcom bust limited overall job growth and led to many job losses in the professional and business services sector, which declined by 6,700 jobs, or 1.6 percent. From 2002 through 2004, job losses became more wide spread, partly a lingering effect of the dotcom bust, and led to an overall reduction in nonfarm payroll jobs, which declined by an average of 41,300, or 1.7 percent, annually. The professional and business services and the information sectors were hit particularly hard, declining by an average of 10,200 and 6,700 jobs, or 2.6 and 7.7 percent, respectively. From 2005 through 2008, nonfarm payrolls in the Boston NECTA expanded by an average of 24,800, or 1.0 percent, annually. Job growth was led by the education and health services sector, which increased by an average of 12,300, or 2.7 percent, annually. Employment in the professional and business services sector began to recover previous losses and expanded by an average of 9,700
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