Report ranks Massachusetts a ‘bottom state’ for affordable housing

The average construction cost per new housing unit in Massachusetts ($334,280) makes it the third priciest in the nation, according to the report.

The top state for affordable housing was Delaware, according to the report by Construction Coverage. Adobe Stock

August 13, 2024

3 minutes to read

Construction Coverage has named Massachusetts a “bottom state” for investment in affordable housing, behind only Hawaii and Wyoming.

Michael Stromberg, lead data analyst at the research firm, said the July 19 report ranked locations by the average construction value of all of the new housing units authorized in 2023. The website used data from the US Census Bureau and Zillow for the analysis, the methodology states.

“In the Boston-Cambridge-Newton, MA-NH metro area, the average value per new housing unit authorized was $311,451, nearly 30 percent higher than the national average of $241,792,” Stromberg said.

The average construction cost per new housing unit in Massachusetts ($334,280) makes it the third costliest in the nation, according to the report.

Earlier this month, Gov. Maura Healey signed what’s labeled as the “most ambitious legislation” to address housing costs in state history. The Affordable Homes Act authorizes $5.16 billion in spending to support the “production, preservation and rehabilitation” of about 65,000 homes across the state in five years, according to the state website.

Construction Coverage, which researches construction software and insurance, states that between February 2012 and May 2022, the annual rate of residential construction spending rose by $700 billion in the United State. Since then, however, it has fallen by nearly $150 billion.

“The factors influencing the ultimate cost of construction are multifaceted,” Stromberg said. These include the costs of materials, labor, regulatory compliance, and site preparation. Housing unit valuation is an estimate of the structure value and not a reflection of the land value, according to the report’s methodology.

Stromberg said the high cost of new housing in the Boston metro area and in Massachusetts as a whole suggests economic prosperity, but also highlights the challenges of increasing the affordable housing stock. “Strict building codes, zoning laws, and permitting processes often increase construction time and costs,” he said.

These were the top and bottom states when it comes to investment in affordable housing:

TOP STATES	AVERAGE*	BOTTOM STATES	AVERAGE*
Delaware	$143,579	Hawaii	$423,609
New Jersey	$157,141	Wyoming	$342,230
West Virginia	$189,464	Massachusetts	$334,280
Nebraska	$191,523	New Hampshire	$303,025
Mississippi	$192,134	New Mexico	$294,066
Kentucky	$195,491	Indiana	$284,439
South Dakota	$205,824	Colorado	$280,276
Virginia	$205,945	Alaska	$279,491
New York	$208,845	Wisconsin	$277,886
Texas	$218,731	Iowa	$277,068
Arkansas	$220,884	Utah	$275,507
Louisiana	$227,295	Michigan	$274,404
North Carolina	$230,054	Illinois	$268,098
Georgia	$230,662	South Carolina	$265,617
Arizona	$232,132	North Dakota	$263,343

Source: Construction Coverage
*Average value per new housing unit authorized

Here’s how the New England states were ranked:

STATE	AVG. VALUE PER NEW HOUSING UNIT AUTHORIZED	TOTAL NEW HOUSING UNITS AUTHORIZED	RANK
Massachusetts	$334,280	13,214	48
New Hampshire	$303,025	4,555	47
Maine	$260,411	6,183	32
Rhode Island	$241,643	1,169	22
Connecticut	$233,889	6,272	18
Vermont	$233,399	2,456	17

Source: Construction Coverage

In 2023, both Massachusetts and New Hampshire ranked third and fourth, with an average value per new housing unit of $290,607 and $278,503, respectively, data from the report show. This reflects a 15 percent increase in average value in Massachusetts and an 8.8 percent jump in New Hampshire.

New Hampshire was also among the top five states with high construction costs.

“High construction costs lead to higher housing costs, making it harder for first-time buyers and renters to find affordable housing,” Stromberg said, noting that this aggravates housing shortages, particularly for the economically vulnerable.

These large metros added the most affordable housing units:

RANK	METRO	TOTAL NEW HOUSING UNITS AUTHORIZED
1.	Houston-The Woodlands-Sugar Land, Texas	68,755
2.	Dallas-Fort Worth-Arlington, Texas	68,029
3.	New York-Newark-Jersey City, NY-NJ-Pa.	63,030
4.	Phoenix-Mesa-Chandler-Ariz.	45,616
5.	Austin-Round-Rock-Georgetown, Texas	38,773
6.	Atlanta-Sandy Springs-Alpharetta, Ga.	38,639
7.	Los Angeles-Long Beach-Anaheim, Calif.	30,767
8.	Charlotte-Concord-Gastonia-NC-SC	29,419
9.	Orlando-Kissimmee-Sanford, Fla.	25,415
10.	Tampa-St. Petersburg-Clearwater, Fla.	25,386

Source: Construction Coverage

Here’s some other New England metros fared in the rankings:

METRO	RANK	TOTAL NEW HOUSING UNITS AUTHORIZED	AVERAGE VALUE PER NEW HOUSING UNIT AUTHORIZED
Hartford-East Hartford-Middletown, Conn.	5 (large metros)	2,114	$191,396
Providence-Warwick-RI-Mass.	27 (large metros)	1,930	$241,368
New Haven-Milford, Conn.	2 (mid-size metros)	1,934	$138,643
Manchester-Nashua, NH	51 (mid-size metros)	1,382	$247,700
Springfield	67 (mid-size metros)	708	$264,677
Portland, Maine	73 (mid-size metros)	3,072	$273,278
Worcester, Mass-CT	75 (mid-size metros)	1,349	$273,783
Bridgeport-Stamford-Norwalk, Conn.	95 (mid-size metros)	1,527	$390,005

Source: Construction Coverage

Without policies to encourage the construction of more affordable housing, home shoppers and developers will turn more toward the Midwest and South, he said. “Continued high construction costs will slow the growth of affordable housing supply, pushing home prices and rents upward.”