Since home prices peaked in 2006, falling home prices and relatively flat incomes have led to improvement in some measures of housing affordability for New Englanders. However, other measures have continued to deteriorate, and, overall, housing affordability remains a problem for New Englanders. An updated study of housing affordability in New England, just released by the Federal Reserve Bank of Boston, sheds light on this picture of housing.
The original Boston Fed report, released in 2007, covers the period 1995 to 2005. The new report updates the analysis through 2008. The results show that as New England's housing prices have declined, affordability has been returning to the pre-housing crisis levels of the early 2000s. However, declining prices nationwide continue to make owner-occupied housing in most New England states less affordable than in the nation. At the same time more of the region’s households are becoming cost-burdened, particularly low- and middle-income homeowners. In contrast, New England has maintained its advantage in rental affordability relative to the nation and renters in the region are far less likely than their national counterparts to face cost burdens.
The updated study was authored by Robert Clifford, research associate in the Bank’s New England Public Policy Center. The earlier study was authored by Alicia Sasser, Bo Zhao, and Darcy Saas, all also affiliated with the Bank’s New England Public Policy Center.
See: The Housing Bust and Housing Affordability, NEPPC Discussion Paper No. 10-1 (June 2010)