So it seems a good time to share some of the gold (and coal) we mined from the Federal Reserve Bank of Boston’s report on real estate in New England. A link to the full report is at the end of the article.
The report “New England’s Housing Markets: Supply and Demand Factors Affecting Housing Prices across the Region” by Sam Shampine is a very deep dive into the economic factors shaping housing affordability issues across New England.
Among its considerations is not just supply-and-demand imbalance, but migration, regional differences, and the shattering impact of COVID-19, which marks an interesting moment where there is a “before” and “after” to consider.
You probably want to know who the winner is. OK, it’s Portland. But if you want to know why, you need to keep reading.
The goalposts keep moving around
The immediate goal of policymakers in every state has been to relieve the price pressure on housing, whose supply in general is inadequate to the demand. This discrepancy had been relatively flat, until the post-pandemic phase, when the year over year change in single-family house prices rocketed from 4% to 20% for two years (2021-2023).
Though the spike has leveled off, the rate is now above six percent, a third higher than before.
Building permits have been issued at higher rates than previously in New England, but at a rate half the national average. This is a financial barrier to be faced by anyone considering moving toward such an economic reality.
Maine↑ issued permits at a pronounced rate of increase during the pandemic, and though slower to respond, Connecticut↑ and Vermont↑ have recently been issuing more. Following the pandemic, Massachusetts↓ permits took a nosedive.
The large metropolitan statistical areas (MSA) of Mass. and Maine - Boston and Portland - gained a disparate share of new permits relative to outlying areas; Boston is perpetually under market stress, but Portland was able to accommodate an increasing share of underserved homebuyers.
Multifamily housing, and multitudes
Multifamily housing permits, however, paint a rosier picture. New England on the whole outperformed the national average, especially in Conn. and Mass. - though the Bay State is again tarnished by a huge city-mouse country-mouse disparity of three to one.
Migration - read: population growth - brought higher numbers to the markets in Maine↑ and New Hampshire↑, both above national in-migration averages, and Conn. at the national average. The growth in this trio was broadly distributed.
The high increased permitting in Maine is another key reason for Portland’s overachieving performance: if you build it, they will come.
Mass. and R.I population growth flatlined, which would have the beneficial effect of reducing pressure on the demand side of an already unbalanced equation.
The monster under the bed, real per capita income, was down in all six states as well as the U.S. average - but Maine beat that average. Overall, Maine buyers and renters had a bit more income to bring to an improved housing picture.
It will come as no surprise that the report notes that areas where income growth is high also issue more permits, attracts more in-migration, and that home values and rents rise. We leave it to you, the reader, to decide whether this is a virtuous cycle or a vicious one.
A few thoughts on the report
This report doesn’t really analyze the outsize role zoning has to play in this milieu.
Zoning laws exist not to promote housing and growth, but they function to prevent it. For many, a house is their major - perhaps only - financial investment. Talk of ‘affordable housing’ is accepted by homeowners only in the abstract, and under one condition: that affordable housing be built somewhere else.
In a middlin’ suburb outside of Boston, when the MBTA zoning law was enacted, all the ‘we believe’ signs came down and ‘stop 3A’ signs popped up everywhere. I rest my case.
There is always an element that doesn’t want ‘those people’ moving into town. But I think the majority have a concern that affordable housing would have the effect of lowering their valuations too, and at a time when a modest three bedroom in a modest route 128 exurb is likely to have an immodest $1 million price tag on it, the last thing you want to see happen to your investment is for its value to go down. And if that money is borrowed (as it assuredly is) there is the danger of a potential short should an economic crisis occur.
And the mood on that front is …sour.
It’s unlikely that a market controlled by zoning boards - which is not a free market - is ever going to yield on that score. Some areas will remain immune to a meaningful response to the need to create housing.
But in New England’s gateway cities - is Portland one? - the zoning and empty industrial structures already exist. And housing would be seen as an improvement to a rundown mill with broken windows.
And as we can see, this has served Portland very well indeed.
https://www.bostonfed.org/publications/new-england-public-policy-center-policy-report/2025/new-englands-housing-markets-supply-and-demand-factors-affecting-housing-prices-across-the-region.aspx
Thomas House, AIA, is principal of THA Architects, LLC, Stratham, N.H.