State’s High Housing Costs Weigh on Economic Opportunity
Jan 29, 2015
Massachusetts has among the lowest poverty rates, highest educational attainment, and best access to health care in the country. But high housing costs continue to hurt economic opportunity in the state, which has one of the lowest rates of homeownership in the nation, according to a report by a Washington think tank.
The report, “2015 Assets and Opportunity Scorecard” by the Corporation for Enterprise Development, ranked Massachusetts 48th of 50 states in housing affordability,with only California and Hawaii having higher housing costs. Median home values of $327,200 in Massachusetts were nearly five times higher than the state’s median income of about $66,768.
Nationally, median housing prices were about three times higher than median incomes.
“The lack of affordability is keeping people from being homeowners,” said Jennifer Medina, a research contributor to the report. “It’s also putting many homeowners at risk of being delinquent on their mortgage loans.”
The Corporation for Enterprise Development’s report compared states across dozens of socioeconomic indicators and found that the nation’s economic recovery has not benefited millions of American families. The report examined income, assets, and poverty; business investment and employment; health care; education; and housing and homeownership.
Massachusetts scored well in most of these categories, graded an A or a B, but it received an F for housing conditions in the state. Housing is considered a gateway to economic opportunity and building wealth since it is often the biggest asset of middle-class families.
In Massachusetts, about 61 percent of residents owned homes, compared with 63 percent nationally, ranking Massachusetts 44th among states. In addition, the state’s high housing costs were more likely to shut minorities and single-parent households from homeownership, the report found.
The rate of homeownership among whites in Massachusetts was 2.2 times higher than minorities, compared with 1.6 percent higher nationally.
Homeownership by two-parent households was 2.4 times higher than single-parent families in the state, compared with 1.9 percent nationally.
The state’s foreclosure rate was below the national average, but more Massachusetts homeowners struggle to pay mortgages. About 3.5 percent of mortgages in Massachusetts were 90 days or more past due between April and June last year, the highest rate among states.
The report compiled a variety of data, including information from the 2013 American Community Survey by the US Census Bureau. The Midas Collaborative, an Allston nonprofit that helps low- and moderate-income workers develop assets, partnered with the Corporation for Enterprise Development to compile the data.
Margaret Miley, executive director of Midas, said even in areas where Massachusetts scored better than the nation as a whole, the data painted a troubling picture.
For example, about 47 percent of Massachusetts consumers had subprime credit scores, or below 700, making them ineligible for credit card and home loans at favorable interest rates. For many, Miley added, subprime credit can affect job prospects, as some employers conduct credit checks on prospective employees.
Miley added that 35 percent of poor households in the state have less than three months of savings. “It’s surprising in such a high-income state,” she said, “that people are that fragile.”
Megan Woolhouse can be reached at firstname.lastname@example.org. Follow her on Twitter @megwoolhouse.