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A massive housing shortage is driving up costs in all of the state’s gateway cities, including New Bedford, making it more difficult for low-income families to find homes or rentals they can afford, a new report finds.
Housing in Distress / Second in a series
MassINC’s Gateway Cities Housing Monitor compared the housing crisis in all 26 of the state’s so-called gateway cities, defined as midsize urban centers. Researchers found that the cities need 36,000 more homes to address the current housing shortage, and a total of 83,000 new homes to keep up with increasing demand over the next decade.
The report, released last week, followed in the footsteps of the Housing for All report that MassINC completed for the New Bedford Economic Development Council earlier this year, which said Greater New Bedford has 4,100 fewer housing units than it needs.
Here are the top takeaways on how New Bedford compares to its peers.
New Bedford has the highest home value growth of any gateway city
Between July 2023 and July 2024, typical New Bedford home values rose by nearly 8%, more than any other gateway city, according to Zillow data analyzed by MassINC.
New Bedford has one of the largest gaps between the growth of new households and new housing units.
Thousands of new households formed in the city over the past decade, but the housing market hasn’t kept up, so there aren’t enough units to house them. It’s a common problem among gateway cities, the report found, but it’s especially acute in New Bedford. The city has the fifth largest gap between household and housing growth.
Most rental units in New Bedford are “naturally affordable” and the city has nearly the lowest asking rents in eastern Massachusetts.
The city is second only to Fall River in the percentage of units that are “naturally affordable,” meaning they’re affordable to people making less than 50% of the state’s median income, without any government subsidy. These units make up 62% of the city’s housing stock, the report said, but rising rents threaten to shrink that number.
Typical asking rents in the city are among the lowest in the state, at around $1,800. That falls in line with the city’s reputation as a “last stop” in eastern Massachusetts for renters fleeing rising rents in other cities. The only cities in Massachusetts with cheaper rents than the South Coast are in the western part of the state.
Still, low incomes in New Bedford make it difficult for many local renters to make ends meet. And the shortage of housing makes apartment hunting highly competitive.
New Bedford’s lopsided housing market benefits affluent renters as low-income renters feel the squeeze.
New Bedford is doing better than most gateway cities at providing rental units that are affordable to extremely low-income households, those making 30% or less of the area median income. The city has a shortage of these units, but it’s less dire than in other cities: it is missing only 3% of the units it needs to house that population.
So, why do so many low-income renters struggle to find apartments in the city?
It’s partially because New Bedford has a shortage of higher-priced units that fit the budgets of middle and upper-income households, MassINC researchers found. Nearly a fifth of the units the city needs to house its middle and higher-income populations don’t exist. So affluent renters, who could afford to pay more for housing, are instead living in cheaper apartments where renters with lower incomes would normally live.
The researchers suggested that building more housing at higher price points could get upper-income renters to move and free up housing for those lower on the income spectrum.
New Bedford has the largest financial gap for constructing new apartments in eastern Massachusetts
It costs $286,000 more to build an apartment in New Bedford than the rental income will provide — in other words, it’s typically unprofitable to build new apartments in New Bedford without any kind of public subsidy. High construction costs are a key factor, the report said, but local land use regulations may also contribute.
That financial gap is common in gateway cities, where rents are lower than the rest of the state, but New Bedford leads the pack in eastern Massachusetts.
It’s typically unprofitable to build owner-occupied homes in New Bedford, too. There is a $107,000 gap between the cost and return-on-investment to build for-sale units in the city. The gap is narrower in the for-sale market because expenses don’t include the cost of operating a rental property.
To address the gap, the report said the state should prioritize housing over other needs in its capital budget and provide more subsidies, such as the Housing Development Incentive Program, a tax incentive targeted at gateway cities.
The researchers also recommended local strategies for gateway cities, such as relaxing zoning rules and coordinating with surrounding communities on regional housing strategies.
Email Grace Ferguson at gferguson@newbedfordlight.org
I’m a fan of the housing shortage, the last thing New Bedford needs is more housing, there are already too many people living in the city, and more low rental costs, more section 8 units, and housing projects will bring in more low income people, and more welfare class residents, New Bedford already has too many illegal immigrants, and those groups have nothing to offer in the city, and tax payers shouldn’t be supporting them.
“I’m a fan of the housing shortage” Jay Nichols, above, certainly cannot be serious! That comment and the balance of his comments must be some form of a parody response to this serious and well written article.
I have you the reasons why the housing shortage in New Bedford is fine with me, the last thing New Bedford needs are more low income housing, and another 10,000 low income residents, the city already has too many of both, more of both just causes more problems for everyone.
Great article. I wonder what the financial gap would be for building luxury units vs low income units.