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Behind Census Numbers

Originally published in The Boston Globe

March 24, 2011
Edward Glaeser (Glimp Professor of Economics, Harvard University)

We have known since December that Massachusetts’ population grew by an anemic 3.1 percent between 2000 and 2010, but this week the census released data that demonstrate the diversity within the state. Outlying areas, like the Berkshires and the Cape, lost population, while Boston and Worcester County grew. These patterns remind us that the state’s future is a battle between great economic energy and profound opposition to new construction, especially in areas around Boston.

As you move away from Boston, there is a strange pattern of growth, stagnation, growth, stagnation. For the first time in 130 years, the city of Boston has grown more quickly than the state; Cambridge also expanded more quickly. Growth was more limited within the inner ring suburbs of Middlesex County, which grew by 2.6 percent, less than the state average. Growth then picks up in Worcester County and falls off in outlying areas, like the Berkshires and the Cape.

Population growth in any place reflects both the demand to live there, based on income and quality of life, and the supply of livable space. Some places don’t grow because of weak demand, while other areas stagnate because regulations restrict new supply.

Housing prices announce whether slow growth reflects limited demand or limited supply. Detroit lost one-quarter of its population over the past decade, and the census reports median home values of $85,000. That means low demand. The census also shows population loss in Lincoln, Mass., but housing prices are over 10 times higher than Detroit, and that means restricted supply. More generally, the high prices in Eastern Massachusetts belie the view that tough winters make living here unattractive.

This undulating pattern within Massachusetts reflects the fact that housing demand falls and housing supply increases with distance to Boston. Greater Boston’s economic vitality has made Massachusetts one of the three richest states in the nation, with average incomes 25 percent above the national average. The concentration of human capital in Greater Boston has turned the region from a decaying industrial has-been to a capital of the information age that attracts talent.

Boston’s growth also reflects an appeal to recent immigrants, who can get around Boston without owning a fleet of Fords. Boston’s overall population increased by 28,000; its Latino population grew by 23,000

Boston’s immigrants help explain why Suffolk was the only Massachusetts county where population grew more quickly than housing supply. Typically, population growth lags housing supply growth by a couple of percentage points because households are getting smaller. In Suffolk County, population grew by more than 10 percent while housing supply grew by less than 8 percent. That crowding reflects the willingness of many people, especially recent immigrants, to trade space for economic opportunity.

Outside Boston, population growth tails off in Middlesex County, because even robust housing demand can’t defeat that region’s rigorous restrictions on supply. Per capita incomes are over 30 percent higher and housing prices are almost 50 percent higher in Middlesex County than in Worcester County, but Middlesex’s housing stock grew significantly less than Worcester’s County’s housing stock. The maze of local land use restrictions explain why, despite high prices, Middlesex County’s population grew by only 2.6 percent, less than the state average and less than half the rate of Worcester County.

Worcester County’s substantially lower prices suggest that demand for homes there is weaker, but as long as they supply more housing, the area will grow. The city of Worcester itself provides affordable housing for people who want an urban life and much of its growth reflects increasing numbers of Hispanics.

In western Massachusetts, supply of housing is even more abundant but demand is also weak. The census reports median housing values in Berkshire county to be around $200,000. The area is pretty — but vacation homes don’t lead to population growth either there or on the Cape — and the economic heart of the state is in Boston’s urban core.

The shape of our state and the nation is now formed by the most parochial local land use policies that make it impossible for the new building that would allow the state to grow in the areas where people most want to live. We should rethink the local regulations that push growth to other states.

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