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MIT ranks affordable housing around Boston

What do Dracut, Waltham and Norwood have in common? They are among the most affordable towns in the Boston area, according to MIT research.

The MIT Center for Real Estate is releasing a new affordability index today that takes into account the adverse effects of living in a place where jobs are inaccessible, schools are poor or open space is inadequate. Such an index has not previously been constructed.

"Given the widespread discussion of affordability, we needed a concrete town-by-town assessment, both to rate towns on affordability and to inform the debate over where mixed-income affordable housing should be built," said Henry Pollakowski, study co-author, director of the Housing Affordability Initiative at the MIT Center for Real Estate and editor of the Journal of Housing Economics.

"The results provided surprises and add to our understanding of the big picture," said Professor Lynn Fisher, index co-author. "Providing enough housing at different income levels is essential to maintaining an economically viable metropolitan area. Paying attention to where the housing is located, however, is crucial."

Town-by-town counts are presented in the report, which is being released at the second Housing Affordability Conference of the Housing Affordability Initiative.

The towns rated most affordable by the new index combine desirable features. Dracut, for example, has a high percentage of affordable owner-occupied units and is reasonably close to jobs. Waltham's schools aren't great, but the town is accessible to jobs and has a good stock of affordable rental units.

By comparison, Duxbury, Plympton and Bolton fall near the bottom of the list because they combine little affordable housing with poor access to jobs. Not surprisingly, Weston, Wayland and Lincoln also make the list of least affordable places, but with an important difference -- they have above-average accessibility to jobs. Pollakowski suggests that this difference should be considered when investing in mixed-income affordable housing.

Using data from a wide variety of sources, including the Warren Group, MIT researchers have painstakingly built a system that allows housing affordability to be assessed for a wide variety of households varying in income and size. This system, built over a two-year period, will be updated annually and will make it possible to study affordability in the Boston metropolitan area over time.

The researchers found that counting market-rate and subsidized housing units was not enough to determine affordability. To get useful answers, important employment, amenity and transit information had to be considered.

For example, Ipswich and Marshfield both have decent amounts of modest-cost housing, but they are farther than average from most of the Boston area's jobs. The real "cost" of housing in one of these towns must incorporate the fact that finding and retaining employment may be more difficult.

Similarly, if towns have worse-than-average schooling or open space, then the housing units in that town are assessed an additional cost associated with the inadequacy. This cost comes from observing what others actually pay to obtain better schools or more open space.

According to MIT Center for Real Estate visiting scholar and Tufts Professor Jeff Zabel, the third index co-author, "By observing housing transactions for 2005, it is possible to extract the value placed on these amenities in the marketplace. This provides a basis for calculating a realistic measure of the value of different town amenities." The same method is used to adjust for job accessibility.

The MIT housing affordability index is one part of the MIT Center for Real Estate's Housing Affordability Initiative, a long-term commitment to providing useful input to the ongoing affordability discussion. With support from the Federal Home Loan Bank of Boston , MassHousing and the Bank of America, the index is being extended to western Massachusetts and the rest of New England.

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