Barbara Howard: Housing costs in Greater Boston, continuing to rise. That's according to the annual report on housing in the region released today by the Boston Foundation. The report's author, Barry Bluestone, is on the line. He is a professor of public policy at Northeastern University. Hi, Professor Bluestone.

Barry Bluestone: Hello.

Howard: So your report found that in Greater Boston, not in the city itself, home prices and rents are still going up?

Bluestone: That's exactly right. Home prices continue to rise, rents for most of the region have been rising, more and more people are finding it more difficult to find housing they can afford, particularly close to the city. As a result, more and more working families are looking for housing outside of Boston, further and further away, and that's starting to raise prices even faster in some of the outer communities than in some of the communities inside Boston.

Howard: Where are the biggest increases?

Bluestone: One of them is Lawrence, Massachusetts, you know, traditionally a working class city where housing has been quite affordable, but enough people have found it necessary to move further away to Lawrence and other communities north of the city and south of the city, that it's putting pressure on prices and prices are rising as much as 10 to 12 percent per year for single-family homes.

Howard: Is it fair to say that the working class is the class being squeezed the most?

Bluestone: Absolutely. Boston, of course, has been home to people with a lot of wealth. It's also, however, been home to people with low incomes because Boston, unlike some other cities, like San Francisco, [has] actually created a lot of public housing so that very low income people who can qualify for public housing or rent subsidies can still live here. The folks who can't live here, or are finding it very difficult, or spending 30, 40, 50 percent or more of their income for rent or a mortgage, are working families, you know, families probably in the greater Boston area, somewhere between $50,000 and $60,000 and $110,00, $120,000 — for them, housing has become very, very difficult.

Howard: What's driving the high prices?

Bluestone: Well what's driving the high prices is actually good news. We have a strong, buoyant economy, probably the strongest in the country with all of the great industries we have here. We are attracting large numbers of people to come here to work, particularly young people. We haven't kept up housing supply to match housing demand, so this is one of the cases where the most simple of economics, supply and demand, can explain this. What's bringing the young people here, of course, are lots of jobs, but also all of our universities, our teaching hospitals, our graduate students, interns, residents, and they are partly responsible for driving up, particularly rents, by two, three, four of them getting together, like my own graduate students, renting the third floor of a triple-decker. And because of that, this older housing stock, the duplexes and triple-deckers, are now being priced out of the market.

Howard: So we're seeing the costs on the rise throughout the metropolitan area outside of Boston itself, but what about Boston itself? Is it even worse there?

Bluestone: Well Boston prices, home prices of course, are in the millions of dollars now, on average. Condo prices have tended to, over the last year, have finally slowed down. I think the average condo price is a little over $400,000. Now this is a one or two-bedroom condo, and that's because we've built a lot of condominiums over the last three or four years.

Howard: In your report this year, you've come up with some recommendations to help bring the housing costs down. Give me some of those recommendations.

Bluestone: Well this is the first report in these 15 years of reports in which we've actually laid out at 10-step program to meet the housing challenge, and it's based on the new demography. The new demography of greater Boston are young people 20 to 34, who are getting 10 years older over the next 10 years, and seniors like myself, 65 and over. We need smaller housing. We need housing that's easier to maintain. And what we need to do is put together a real coalition. We're calling for the governor, we're calling for the mayors to get together, to bring together architects, developers, finance people, construction trades, to build what I call 21st century villages. These will be multi-family housing units, apartments, condos, lots of common space, lots of common amenities, to attract young people from the triple-deckers and the duplexes into this new housing, freeing up some of the old housing originally built for working families at a more reasonable price.

Howard: Thanks so much for joining us, Barry Bluestone.

Bluestone: A pleasure to be with you.

Howard: That's Barry Bluestone. He's professor of public policy at Northeastern University. He is the author of a new report out today from the Boston Foundation on the housing situation in and around Boston. He has a set of recommendations to help bring the prices under control. You can find that at our web site.

Read the full housing report from the Boston Foundation here.