Different Supply Stories, the Same Affordability Squeeze

I spent seven years in the Boston area before leaving in 2021 – grad school in the city, then a few years running market-rate developments in Cambridge. Even then the affordability strain was hard to miss: long-term tenants priced out, and many of the developers I knew either rebuilding their businesses around affordable housing or leaving for the Carolinas, Tennessee, etc. At the time, I read it as a coastal-gateway story.

Now that my work runs across eight states, I would frame it differently. The affordability pressure is widespread, but the supply conditions behind it are not uniform – in some markets, they're close to the opposite. Boston's pipeline has thinned dramatically: per the Boston Globe, Greater Boston permitting is down roughly 67% since 2021, leaving the city on pace for its slowest construction year since 2010, driven by tighter energy codes, a 20% affordability set-aside, and long-standing zoning friction. Much of the Sunbelt has the reverse problem: Nashville and Charlotte delivered so much product through 2023-2025 that both spent years working it off, with Charlotte still at it after eleven consecutive quarters of rent declines.

What is consistent underneath those market-rate numbers, however, is the steady erosion of the affordable base itself. Per Harvard's Joint Center for Housing Studies, the number of units renting below $1,000 (i.e. adjusted for inflation) has fallen more than 30% over the past decade, with declines in nearly every state. Much of that is ordinary filtering – rents and operating costs rise, new construction targets the top of the market, and older units re-rent higher. Some of it is sharper, and it is what operators notice first: investors acquiring unsubsidized buildings and repositioning them above market. Either way, the lower end of the stock thins whether a metro is overbuilt or cannot build at all, and mission-driven owners carry most of the work of preserving it.

The irony here is that several of the policy responses meant to help cut against those same owners. Massachusetts' 2026 rent-control ballot question would cap rent increases at the rate of inflation regardless of a building's actual insurance, utility, and maintenance costs – a flat cap that can squeeze a nonprofit recapitalizing an aging property as much as any market landlord. At the federal level, the 4% LIHTC was effectively expanded (i.e. the bond test cut from 50% to 25%) even as the gap financing and rental assistance that make a mission deal pencil keep thinning. The more durable issue is not next quarter's rents but the erosion of the affordable base on both sides of the supply divide, with the owners best positioned to preserve it often the ones squeezed hardest. That is what I would watch over the next several cycles.

Sources: Boston Globe and Harvard Joint Center for Housing Studies.

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