Report shows without changes, push to meet climate goals could add $10K to $23K to median single-family home - MassLive.com

Report shows without changes, push to meet climate goals could add $10K to $23K to median single-family home cost - masslive.com

A Home for Everyone: From rising rents to barriers to home ownership, part of MassLive’s ongoing coverage of housing issues in Massachusetts.

___________

To reach its climate goals, Massachusetts needs to enact new policies to ensure that homes remain affordable for low- and middle-income residents, according to a new report out Tuesday from the Home Builders & Remodelers Association of Massachusetts.

According to the report, on-site fossil fuel consumption in residential and commercial buildings made up 27% of greenhouse gas emissions in Massachusetts in 2017, mostly driven by oil and natural gas used for heating. To reach the state’s goals of reaching net-zero emissions by 2050, the building sector needs to cut down on energy usage; however, those cuts could result in rising home costs while the state is already in a housing crisis.

“When it comes to housing policy, we must balance the scales in these two vital areas – affordability and climate change. Our policymakers must avoid tilting too far in one direction to the detriment of the other,” said HBRAMA President Jeffrey Brem in a press release. “Legislative and regulatory efforts at the state and local levels should be geared toward accelerating the construction of housing that is more energy-efficient but also more equitable, more attainable and more affordable to a larger pool of Massachusetts residents.”

In 2021, Massachusetts created a specialized stretch energy code in which municipalities can opt into setting higher energy requirements for new construction.

“The long lifetimes of building envelopes and building heating systems mean that buildings built today may have similar energy use profiles for the next 30-40 years or more,” the report says. “It is much less expensive to build a new energy-efficient home at the outset than to retrofit an existing structure.”

According to HBRAMA’s report, which was produced with researchers from the Massachusetts Institute of Technology and Wentworth Institute of Technology, the stretch code could increase building costs by 1.8 to 3.8%, for single-family homes and townhouses, adding $10,000 to $23,000 to the median single-family home cost, and by 2.4% for large multi-family buildings.

These cost increases could in turn be passed on to renters and homebuyers, pushing the median single-family home out of reach for 15,000 to 33,000 households. The rising prices would particularly affect home purchasers with incomes between $80,000 and $190,000 and renters with incomes between $20,000 and $90,000.

“The math has to work so that we can build to these higher standards, but do it in a way that it’s not going to cause a project to not pencil out, because then those are homes that just aren’t brought on,” said Rob Brennan, a real estate attorney, developer and chair of HBRAMA’s Government Affairs Committee, in an interview. “You’re not doing anything to ease the pressure that already exists on housing availability and pricing in Massachusetts, where the demand is so much greater than what the supply is.”

The median new home in Massachusetts was already the third highest in the country in 2021 at $608,827, and three out of four households in the state are unable to afford that price, according to the report.

In addition to rising home prices, utility costs have gone up in recent years. In Massachusetts, the average residential cost per kilowatt hour for electricity increased by 75% between 2010 and 2022, including a 12% increase between 2021 and 2022 alone, the report shows.

While increasing efficiency in homes can lower utility costs, that reduction is not enough to make up for rising housing costs.

“When you’re going to your bank and you’re being evaluated for what you can borrow when underwriting your mortgage, (the bank) does not take into consideration that long-term energy and utility bills savings and does not ... allow you to borrow more money upfront to pay for those increased costs and increased capital investment that’s going to be lowering your utility costs over time,” Brennan said, adding that HBRAMA has spoken with the state’s Congressional delegation about making changes to these policies at he federal level.

A big part of the problem is that housing production is down, at about half the level it was in the 1980s, according to the report. In 2022, building permits were issued for 18,181 housing units across the state.

Barriers to creating more housing

Through interviews with developers, researchers on the HBRAMA report determined that there are major barriers to creating more housing. One of the biggest roadblocks is restrictive land use rules: in Greater Boston, only about 16% of the land area is in a zoning area that allows the construction of multi-family housing, and on about one-quarter of the land, zoning allows the development of only one dwelling unit per acre.

“Some of the municipalities advocating for stringent building energy efficiency requirements are laggards in housing affordability and also in overall energy-efficient land use patterns,” the report says. “Municipalities that have extensive large lot, large unit, single-family land use regulations that mandate energy-intensive, environmentally-destructive and unaffordable living patterns are seeking to adopt policies that will have only modest impacts on climate emissions compared to loosening their restrictive land use regulations but will worsen affordability.”

Massachusetts has recently passed some laws to help address the issue: Housing Choice, which reduced the number of votes required to adopt or change zoning ordinances or bylaws to facilitate housing production, transit-oriented multi-family housing and mixed-use development; and the MBTA Communities zoning law, which requires municipalities served by the MBTA to have at least one zoning district within half a mile of a transit station where multi-family housing is permitted by right.

However, these new regulations are not enough, the report says, and goes on to recommend the state legislature require communities that adopt the specialized stretch energy code also be required to make changes to restrictive land use regulations to allow for smaller lot and unit sizes, larger height limits and more multi-family zoning.

Other changes that could help address the issue include streamlining permitting processes that delay building projects; restructuring climate-related financial incentive and tax credit programs to make them easier to access for developers; increasing technical assistance for green building projects; creating more financing sources, such as the recently-announced Massachusetts Community Climate Bank, or “green bank;” offering more support for low-income renters; and creating new tax classifications and exemptions for highly energy-efficient housing.

The green bank, announced by Gov. Maura Healey earlier this month, will be run out of MassHousing and start with $50 million from the Department of Environmental Protection. It will provide capital to development and retrofit projects to improve energy efficiency in affordable housing.

Brennan said the green bank is a step in the right direction.

“The focus on low- and moderate-income housing is the correct initial focus for the initial funding of the $50 million dollars,” he said. “It’s gonna take an expansion of that program, both in terms of the dollars that are available and an expansion of the scope and not just focusing on low and moderate income ... but moving that to be more readily available to workforce and the missing middle housing.”

He added that other financial incentives will be crucial to continue to address the issue.

“Climate change is a profound challenge,” the report says. “It is imperative that the Commonwealth and its municipalities act decisively to address climate change and build equity simultaneously. Reducing carbon emissions from residential buildings can create safer, healthier housing but it must also not hinder the sufficient provision of affordable housing. Focusing on housing affordability in conjunction with housing sustainability is essential.”

To read the full report, visit HBRAMA’s website here.