Capital for Affordable Housing: Launching the Momentum Fund in Massachusetts

Massachusetts has a persistent housing shortage. Over the last four decades, housing permit approvals have steadily declined, even as the state’s population has grown. According to the Unlocking Housing Production Commission, the state needs an estimated 222,000 new homes by 2035 to meet projected demand. These pressures fall hardest on low- and middle-income households, who face barriers to both homeownership and rental housing. The COVID-19 pandemic intensified these challenges. Nationwide, construction material prices surged— reflected in the Producer Price Index increase of almost 50% from March 2020 May 20224. In Massachusetts, residential construction costs have doubled since 2016, driven by rising labor and material costs and interest rates on financing. The high-interest rate environment made access to debt and equity costly. These factors contributed to many projects stalling and a resultant backlog of permitted but unbuilt homes across Massachusetts. This prolonged imbalance between housing supply and demand, coupled with limited supply of capital in a high interest environment has further driven up rents and home prices, limiting economic mobility and talent retention statewide.