The first step in developing a housing production target is estimating how many homes it would take to address the existing shortage of homes.
Doubled up and overcrowded households
As discussed in the Needs Assessment, one way that people cope with high housing costs is by “doubling up” with another household or by living with extended family, often in overcrowded conditions. Of the 48,800 overcrowded households in Massachusetts, EOHLC estimates that approximately 16,000 are families with children who are living with extended family or doubled up with another household. An equivalent number of additional units are needed to allow those families to find homes more suitable for their needs.
Families in the Emergency Shelter system
In addition, Massachusetts needs additional homes for residents who are not adequately housed. At the end of 2024, 6,800 families were living in the state’s family shelter system. The Healey-Driscoll Administration has been working to move these families into permanent housing. This is a challenging effort because even with rental assistance and vouchers, there are very few homes available for rent. If most or all of these families can be moved into permanent housing over the coming years, they will enjoy better outcomes and there will be less strain on the Emergency Assistance system. Of course, these families will need homes to move into, and these needs are not accounted for in the calculations of demographic demand or other components of housing need. As a result, EOHLC estimates a need for an additional 6,800 homes to accommodate these families.
Achieving a healthy vacancy rate
One expression of Massachusetts’ severe housing shortage is critically low vacancy rates of 1.6% for sales or rentals. The shortage creates intense competition for available units, driving up prices and fueling displacement. If more homes were available, renters and buyers would have more options, landlords would have less power to charge maximum rents, and fewer home sales would generate bidding wars. Vacancy rates that are too high, however, create their own issues, such as disinvestment. A study by the Joint Center for Housing Studies used historical trends to benchmark “natural” vacancy rates of 7.4% for rentals and 1.5% for ownership. These values correspond to rates in the mid-1990s before Massachusetts started seeing the most extreme price increases. EOHLC estimates the state needs 13,000 additional homes for sale and 38,000 additional homes for rent in order to achieve the target vacancy rates. This would provide more choices for people looking to move, would reduce bidding wars, and would give landlords less power to set prices at or near the maximum rate.
“Missing Households”
Another element of our current shortage is pent-up, or latent, demand. When people can’t find an affordable home for themselves or with a partner, they end up living with parents or roommates instead. This can be seen in headship rates over time: back in 2000, about a third of people in their twenties were the head of a household. By 2019 that had fallen to a quarter of people in their twenties. For some this may be preferable; for others, suboptimal. A 2022 Up For Growth report, based on household formation changes since 2000, estimated 108,000 “missing households” in Massachusetts. If the analysis is limited to non-family households headed by someone under the age of 45, EOHLC estimates that there is ‘latent demand’ for approximately 34,000 housing units from young adults currently living with roommates or parents, but who would prefer to live independently. If more affordable homes were available, these young adults would likely establish their own households. Therefore, EOHLC identified a need for 34,000 housing units to meet this latent demand.
Conversion to seasonal use
Another element of housing need relates not to demand, but to supply. As noted in the Needs Assessment section on seasonal housing conversion, EOHLC estimates that the Cape and Islands and Western Mass collectively lost about 9,600 year-round homes to seasonal conversions during the past decade. Preserving these homes from conversion or producing enough homes to compensate for their loss is essential to ensuring adequate supply in those regions. Recognizing that there are currently few policy mechanisms for prohibiting or discouraging seasonal conversion, EOHLC identified a need to produce an additional 9,590 homes in order to compensate for the anticipated seasonal conversion.
Summary
In total, approximately 115,600 homes are needed over the next ten years just to solve our existing and growing shortage of housing. This figure doesn’t even account for the shifting housing needs of a growing and aging population.