40B Facts and Figures
Massachusetts Ranks 49 out of 52 States/Districts providing Affordable Housing
The National Low Income Housing Coalition in their report on low income housing ranked Massachusetts 49 out of 52 States and Districts in providing affordable rental housing to the residents.
In Massachusetts, the Fair Market Rent (FMR) for a two-bedroom apartment is $1,138. In order to afford this level of rent and utilities, without paying more than 30% of income on housing, a household must earn $3,792 monthly or $45,502 annually. Assuming a 40-hour work week, 52 weeks per year, this level of income translates into a Housing Wage of $21.88. In Massachusetts, a minimum wage worker earns an hourly wage of $6.75. In order to afford the FMR for a two-bedroom apartment, a minimum wage earner must work 130 hours per week, 52 weeks per year. Or, a household must include 3.2 minimum wage earner(s) working 40 hours per week year-round in order to make the two bedroom FMR affordable. In Massachusetts, the estimated mean (average) wage for a renter is $15.33 an hour. In order to afford the FMR for a two-bedroom apartment at this wage, a renter must work 57 hours per week, 52 weeks per year.
Or, working 40 hours per week year-round, a household must include 1.4 worker(s) earning the mean renter wage in order to make the two-bedroom FMR affordable. Monthly Supplemental Security Income (SSI) payments for an individual are $708 in Massachusetts. If SSI represents an individual's sole source of income, $212 in monthly rent is affordable, while the FMR for a one-bedroom is $953. A unit is considered affordable if it costs no more than 30% of the renter's income. 43,000 Housing Units developed under 40B in 39 years. CHAPA issued a report in February 2006 titled "The Fact Sheet on Chapter 40B, the State' Affordable Housing Zoning Law" where they indicate 43,000 40B units built: "Approximately 43,000 units in 736 developments have been created under 40B statewide since the early 1970s (an average size of less than 60 apartments or homes per development). This total includes approximately 23,000 affordable homes reserved for households below 80% of median income. Of the 43,000 units, approximately 31,000 are apartments and 12,000 are homeownership units. The level of production is higher than any other single housing program available in the Commonwealth. There has been significant progress at the local level in recent years" DHCD reports 40B developed less than 20% of Subsidized Housing DHCD report on Subsidized Housing Inventory dated February 28, 2007 indicated the following:
Track Record - Disappointing at less than 2% of Housing over 37 years
In the 2000 census there were 2,526,963 households in Massachusetts Currently DHCD estimates 9.5% of these or 238,931 units of subsided housing Approximately 1 million of the 2.5 million total housing units are apartments. Conclusion These reports indicate that Chapter 40B has created 18% of the subsidizing housing units in the Commonwealth (43,000 units of 40B projects vs. 238,000 of total subsidized units). 18% is not had a significant percent of the affordable housing in Massachusetts. Of the total 2.5 million housing units in Massachusetts, 40B has provided less than 2% of total housing over 37 years. Rental units have increased by 31,000 our of 1,000,000 or 3% over 37 years. Whereas, homeownership units have increased by 12,000 out of 1,500,000 or less than 1% over 37 years. On average 40B has added 1,162 units per year over 37 years or .05% per year. These numbers are an embarrassment to anyone interested in developing affordable housing for the residents in Massachusetts. The conclusion that one reaches from these statistics is that 40B has not been an effective tool to develop affordable housing in Massachusetts and that we need a new approach.
Chapter 40B provides affordable housing to narrow range of incomes - Less than $6K
Hidden in the details of MGL40B is a strategy that MGL40B only provides housing to a narrow range of incomes. A family must earn no more than 80% of the Ami to qualify for affordable housing and they must be able to afford a mortgage through a bank. These two forces limit the maximum and minimum salary range to less than $10K. This varies from location to location and varies with the specifics of a project, but as an example, consider the following.
When a family of four that buys a 2 bedroom 40B condo in Chelmsford for $156,250 they must come up with a down payment of $7,813. At 80% of the AMI for Lowell they may earn no more than $53,650. To qualify for a mortgage, they must earn at least $50,000 and have no more than $260.month in other debt payments. Some banks may stretch the limits and grant a mortgage to a family that earns $48K in Lowell. They may qualify for other programs such as soft second mortgages, etc, but these programs are very hard to access and frequently are under funded.
The bottom line is that in Chelmsford a family may not earn more than $53,650 and they must earn at least $48,000. A $5,650 range. Furthermore it does nothing to provide housing to those that really need it with incomes of less than $48,000 per year.
Chapter 40B does not promote the American dream of building up assets in home ownership
Affordable units are deed restricted and carry a provision that limits the resale value of the affordable unit to no more than the raise in the affordable incomes as published by HUD (AMI rates by community) Over the past five years these rates have stayed flat or grown by 2% to 3% while the real-estate market has risen much faster. If the AMI's for any community drops, which they have in the past, then the resale value also will drop. What this means is that a family of four in Chelmsford will come up with $$7,813 in cash for a down payment and over a ten year period the growth of this investment will be limited to the growth of the 40B unit as limited by the growth in the AMI.
