Massachusetts housing push stalls as costs and red tape slow progress
When Gov. Maura Healey laid out a plan to build 222,000 homes by 2035, the message was clear: Massachusetts has no time to waste.
A year later, many proposed housing projects are stuck in limbo, squeezed by high interest rates and rising costs the state cannot control.
The state has poured millions of dollars into programs intended to spur housing production, including a $5.1 billion bond bill signed in 2024 , and has passed a number of reforms aimed at removing bureaucratic barriers to development.
But not all of the obstacles to building are within the state's control. Construction permitting has slowed, and high interest rates and other market pressures have made development increasingly expensive — causing some projects to be delayed, scaled back or abandoned altogether.
According to U.S. Census data, in 2015, more than 17,400 new homes were permitted across the state. Permits peaked after the pandemic in 2021 at more than 19,800, but last year, the number was only about 12,000 housing units.
If the 2025 pace continues, permits for only about 108,000 new housing units would be issued by 2035.
In the years since the pandemic, construction costs have skyrocketed and continue to rise. The cost of construction in Boston went up more than 4% between the end of 2024 and 2025, according to consulting firm Rider Levett Bucknall .
"We're still in that kind of perfect storm where what's driving construction costs is a little bit of everything," said Michael O'Reilly, vice president at Rider Levett Bucknall North America and manager of the firm's Boston office.
One of the major issues cited by developers and construction professionals in interviews is rising materials costs. Prices for steel, lumber and other building materials began to climb after the pandemic, when construction picked up again. However, the still-recovering supply chain couldn't always meet demand.
"I can remember building houses for as much as $30,000 or $40,000, materials-wise," said Mark Aubin, an instructor with the Home Builders Institute's Job Corps training program in Chicopee, who has four decades of experience in construction. "The same house, square footage-wise, is triple in price now because of the materials."
Noah Sawyer, director of real estate for Just a Start, a Cambridge nonprofit that builds affordable housing, said he first became aware of the problem in 2022.
"Costs were changing by the day," he said. "Much of that has gone down, but prices haven't gone back down."
More recently, tariffs imposed under President Donald Trump have only exacerbated the problem. In Massachusetts, some of the closest sources of materials are outside the country, so tariffs are unavoidable, Sawyer said.
For example, Just a Start typically gets its lumber from Ontario, Canada, he said. That leaves them with the choice of either paying higher prices due to tariffs or switching to domestic sources farther away, like the Pacific Northwest, which would mean covering higher shipping costs.
O'Reilly said geopolitical events haven't helped. Fuel costs have gone up amid war in Iran , which only makes shipping more expensive — on top of the cost of powering construction machinery.
A recently completed apartment building at 52 New St., Cambridge.(Tréa Lavery/MassLive)
He said sometimes builders can reduce costs by substituting alternative materials or by pre-purchasing in bulk before construction begins to avoid paying more when prices escalate later on. But it isn't always possible to keep a project within budget, and when that happens, they need to consider scaling back.
Because Just a Start builds affordable housing, the organization is even more affected. Affordable development is usually possible only with government-funded grants, which are already limited and competitive. With each project costing more, those grants don't stretch as far, and fewer projects are built.
Just a Start has adjusted plans for some projects to cut costs, but they try not to compromise too much on the details that make their housing livable.
"We're constantly looking for solutions," Sawyer said. "We try to build quality housing … There's only so many places we can cut corners."
Demand for labor adds to growing construction costs
Another cost driver is labor. According to the state's housing needs assessment released last year, residential construction employment is about 11% above pre-pandemic levels, or about 18,000 people, but that is still below what is needed to meet the demand. This makes it more difficult and more expensive for builders to find the workers they need.
"Students don't want to get into the skilled trades anymore. People are thinking, college and college and college," said Aubin, the Job Corps instructor. "Your average age of a construction worker right now is probably 55 to 60 years old."
Though the average wage for residential construction workers is slightly above the state average — about $96,000 per year, compared to about $94,000 — but the skills largely overlap with those needed for other, higher-paying types of construction, according to the report.
Developers can raise the wages they offer to attract more workers, but that only raises costs.
The report indicated that encouraging more people from other demographics to enter construction could help increase labor availability. In particular, only about 21% of workers in the residential construction industry are female, according to the state.
Regulatory barriers hinder home construction
Even without high interest rates, materials and labor costs, developers often cite regulatory barriers that make it near-impossible to build, especially for larger projects.
In many places around the state, local zoning laws prohibit multifamily housing outright or without a special permit, which can take months to secure. Most cities and towns also require developments to undergo a design review before building permits are issued, with the scope and requirements of the review varying by community.
The longer it takes for a builder to get approval, the more a project tends to cost, as prices go up and they sit on land they're already paying for but can't begin building on.
Housing advocates say some regulations, at both the state and local levels, are outdated or unnecessary and significantly increase costs. Some have recently called for updates to the state Building Code, such as legalizing apartment buildings with a single staircase , a design that is much easier — and cheaper — than the multiple-stair design now required. Healey signed an executive order in February to explore legalizing single-stair construction .
"We've seen other jurisdictions around the country that face all of the same geopolitical factors — high interest rates, building costs, material costs, etc. — but have reduced some of the zoning, permitting or code restrictions on new construction," said Jesse Kanson-Benanav, executive director of the advocacy group Abundant Housing Massachusetts. "(Those jurisdictions) are still building and are building more, are building at lower costs and the cost of housing is lower than it is here."
A condominium building under construction on Bremen Street in East Boston.(Tréa Lavery/MassLive)
Massachusetts has implemented or proposed a number of changes in recent years to ease these obstacles. The MBTA Communities Act required 177 cities and towns to adopt multifamily zoning, and a law that took effect last year legalized accessory dwelling units statewide .
A proposed ballot question that could be put to voters in November would continue this trend by allowing the construction of single-family homes on smaller lots than are allowed in many communities.
Other legislation meant to make housing more affordable, however, could have different effects. For example, some in the real estate industry have decried another proposed ballot question to implement statewide rent control. Others say existing inclusionary zoning requirements in some cities, which require a percentage of units in multifamily housing to be set aside as affordable housing, make it impossible to turn a profit.
The same goes for laws requiring green or sustainable building, of which infrastructure can be more complicated and expensive than that for traditional construction.
Boston, in particular, has been criticized for its rigorous inclusionary zoning law, which sets higher requirements — at 20% — than most jurisdictions with similar rules. But Mayor Michelle Wu has stood firm on the city's requirements for new construction, saying they are needed to protect residents.
"If the implication is that the only way the city of Boston can be a successful, competitive city is through a race to the bottom where we go to the lowest standards for workers, for our climate safety, for our affordability for seniors … that is not what we are trying to do in Boston," Wu said in an interview on GBH News' Boston Public Radio on March 10. "We're not going to be a place where you can probably squeeze out every possible dollar because of a willingness to erode this or that standard."
Kanson-Benanav explained that the typical housing developer is not putting up millions of dollars on their own, but has to solicit capital from investors who prioritize profits. If the profits in Boston or the rest of Massachusetts go down — because of red tape, materials costs or any other factors — those investors are often happy to take their money out of the city, the state or the real estate industry entirely.
By removing some of the barriers that are within the state's control, he said, Massachusetts can make it easier for both large-scale developers and the average property owner building in their backyard.
"The system we have in greater Boston, really throughout Massachusetts, is highly restrictive and adds thousands, if not millions, of dollars to the cost of building before a single shovel even hits the ground," he said. "It's not just about helping the large developers, making large-scale multifamily development more feasible. It's about giving our existing residents the opportunity to play a role in meeting our housing needs as well."
More on housing
Read the original article on MassLive . Add MassLive as a Preferred Source by clicking here .
