Which city is more affordable, Houston or Boston?

Blue state housing policy squeezes out the middle class. Red state housing policy screws over the poor.

Houston is often held up as a housing affordability success story. Its lack of zoning enables lots of housing construction, which helps keep prices in check. Houston’s abundance of housing has also been an important ingredient in the city’s remarkably successful efforts to reduce homelessness. 

Surely, Houston would compare well on housing affordability to Boston, a precious peninsular city where housing construction is seriously constrained and rents are higher than the buildings.

Yes and no. A new report by Yonah Freemark of the Urban Institute injects some nuance into the housing affordability conversation. Freemark finds that Houston is much more affordable to middle-class households, thanks to its robust housing production. But Boston is more affordable to those with very low incomes, thanks to its relatively generous government housing subsidies. 

The report illustrates a broader point that I constantly return to my work: increasing the supply of market-rate housing can essentially solve the housing crisis of the middle class. But government subsidies always have been and always will be required to provide decent housing to those at the bottom of the income distribution. 

Freemark’s report is an exhortation to walk and chew gum at the same time. Both supply and subsidies are necessary to address America’s housing crisis. It's remarkable how often this “yes and” message is overlooked in the thunderdomes of local politics and various internet posting platforms. Hopefully, more activists and governments will come to see these two policy pillars as the foundation for grand bargains that serve everyone’s housing needs. 

Has LA cracked the code for building affordable housing?

Here’s what Freemark found: In Houston, the median home value is about 3.2 times the median income. In Boston, that ratio is about 5.3. In other words, the typical middle class household has a much easier time purchasing a home in Houston than they do in Boston. Zoning and land use regulations are not the only differentiator here, as Freemark points out. But they’re clearly a major factor. Houston’s regional housing stock grew by 53% between 2000 and 2020, while metro Boston’s housing stock grew by just 16% over that time period. 

But when it comes to housing affordability for low-income residents, this dynamic is reversed. More than 80% of renters with extremely low incomes are considered severely housing cost-burdened in Houston. In Boston, just over 60% of low income renters are severely cost burdened. You’d think that Boston, as a much more expensive city, would have more low-income renters who are hard up, not fewer. The reason Boston’s low-income housing picture is slightly better than Houston’s is because it has a lot more subsidized housing. Boston has 63 federally subsidized units for every 100 household in need. Houston has just 22.

Learning from Houston

Both of these findings are consistent across cities, according to the report. Cities with higher rates of housing production tend to be more affordable to the middle class. More expensive cities tend to have better housing affordability programs for low-income people. The former tend to be in red states, the latter in blue states. Each could learn from the other. 

Generally speaking, however, red state cities have an easier path to better comprehensive housing policies. If a city like Houston were ever to step up its government spending on low-income housing, that money would stretch a lot farther than it would in a city like Boston. 

Freemark found that 9% of extremely low-income Houstonians live in naturally occurring affordable housing, market-rate units that are cheap enough for low-income people to reasonably afford. These homes are liable to become unaffordable at a moment’s notice. But their existence illustrates why Houston has been successful in combatting homelessness. The fair market rent for a one-bedroom apartment in Houston is $1,100. In Boston it’s nearly $2,400. Doesn’t matter if you’re a private individual or a government agency: You’d rather pay Houston prices than Boston prices.