If so many people are leaving Massachusetts, why aren't housing costs going down?

Nearly everyone agrees that perhaps the biggest threat to Massachusetts' economy is that
But if so many people are moving away, why don't housing prices go down?
The state's combination of slow population growth and sky-high prices would seem to contradict the basic laws of supply and demand.
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The simplest explanation is this: Even if people leave the state, Massachusetts is so short on homes that
There is no true estimate of exactly how many homes Massachusetts needs to meet demand right now, because different economists have different ways of measuring these things.
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So researchers tend to defer to the most obvious indicator: the
'There is no one perfect measure of the housing shortage,' said Daniel McCue, a senior research associate at Harvard's Joint Center for Housing Studies. 'The easiest thing to look at is the housing market and the way prices are growing here. That is indicative of extreme demand that the state isn't meeting.'
One recent example: In many parts of the country, home prices have modestly dipped over the last two years due to rising interest rates. Not here. Statewide,
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That alone, said McCue, is enough of an indicator that the state needs to build more, much more.
And then there's the broader picture of the state's population trends.
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Much of
under President Trump.
But immigration has driven population growth here for some time. Domestic migration was negative well before COVID — every year going back to 2014 — while international immigration has been positive. Then there are births in the state, which have outpaced deaths here for years, though that growth has slowed recently. So while people are leaving the Massachusetts, the population is still growing.
And on top of the number of people who live in the state is the number of households they form. That number is also expected to grow over the next ten years, said McCue.
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Someone forms a new household when they move into a new living arrangement. The simplest example of this is when a young person moves out of their parents' home, and what was one household becomes two.
Household growth has surged in the US in recent years — driven mostly by Millennials — and the same has been true in Massachusetts. Between 2025 and 2035, the state figures some 500,000 Millennial and Gen Z residents will form new households here, exceeding the pace at which Baby Boomer and other older households shrink or move away.
A condo development under construction in Jamaica Plain.
Jessica Rinaldi/Globe Staff
The easiest way to think of that dynamic and how it impacts the housing market in Massachusetts is like this: Picture a couple who raised two children in a Boston suburb. Eventually, those children will move out on their own, forming new households of their own that require housing. Most won't find any place to live in the town they grow up, unless that town has built new housing. At the same time, their parents will still be living in the house they grew up in, now with empty bedrooms, because there are so few smaller options.
What this dynamic means is that the number of people who need housing in Massachusetts will keep growing, even if the overall population does not.
Those are the new households the Healey administration accounted for when it called on the state to build 222,000 new homes between 2025 and 2035. The researchers who helped create that recommendation assumed zero population growth; if they're wrong, of course, the state will need even more.
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One somewhat common refrain is that population loss wouldn't be such a bad thing for Massachusetts, because it could lower housing costs. Why is it such a bad thing if the kids move away from the town they grew up in, or even out of the state, if it means demand for new homes will go down?
The answer, said McCue, is that those kids are future workers, who power the state's companies and economy. If they leave, good jobs will follow. Housing costs would drop because of a downturn in the state's economy marked by job loss, companies leaving the state, and a generally weaker Massachusetts.
'That is not a scenario that anyone should be rooting for,' said McCue. 'States with healthy economies don't shrink.'
Andrew Brinker can be reached at

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