If it seems like the rent is a bit high in Boston these days, it's not your imagination. Back in September, Boston officially became the state with the third-highest apartment rent in the nation. That is far from the whole story, though, as even more recently, it appears that rent prices may be dipping ever so slightly. Even if that is true, however, Boston still has the third-highest rent in the country, and it is affecting many aspects of the real estate market. Boston City Properties is here to bring you the low-down.
New York City and San Francisco have the highest and second-highest rents in the U.S. However, both cities experienced negative rent growth as of the third quarter of 2016 when compared with the second quarter. Meanwhile, during that same period, Boston rent prices increased by 0.9 percent. Despite this, it is still extremely unlikely that Boston will ever rise to the second spot, as rents in New York City and San Francisco are so much higher. In September, average rent in NYC was $3,441, and average rent in San Francisco was $2,481. Meanwhile, at the time, Boston's average rent was $2,072.
New York City's average rent dipped by just 0.1 percent, so experts don't think that it's the start of a new trend. San Francisco's, however, dropped by 0.8 percent, which is more significant and could be a sign of a shift in rent trajectories. Unlike Boston, however, San Francisco has very little available land on which to build new residential housing. As a result, it doesn't seem very likely that San Francisco's rent prices will continue to drop. Boston, of course, is in the midst of a construction boom, and it is affecting rent prices in a big way.
Last year, Boston experienced a rental rate increase of 4.3 percent. At the same time, the apartment vacancy rate for the city stood at 5 percent. Nationally, it stood at 4.4 percent. The national vacancy rate is expected to keep increasing steadily as new housing units are added to the market. Ostensibly, this same thing will occur in Boston, with so many new units going up all the time. Still, only time will tell if this phenomenon actually occurs. Multifamily building permit requests have slowed down lately, but experts believe that new construction will continue to outpace net absorption for the time being.
More recently, as of January 2017, the average monthly rental price for a one-bedroom apartment in Boston stood at $2,455. The average monthly rental price for a two-bedroom apartment in the city stood at $3,062. Over the six months leading up to January 2017, rent prices around the city increased by an average of 2.6 percent. Of course, the prevailing rate varies depending on where you are. For example, the average rent price for South End recently stood at around $3,500 while the average rent price for West Roxbury stood at just $1,896. Somewhat affordable housing is still out there, but it's dwindling fast.
Interestingly enough, average rent prices in Boston actually dipped a little at the end of 2016 and leading into the first part of 2017. This was the first drop in rental prices in the city since 2010. However, it was only a drop of 1.7 percent, which equals a drop of $36 per month on a monthly lease of $2,038. More than likely, this is just a one-time drop. However, the influx of new apartments on the market could finally be helping to bring rent prices down a little.
During the first nine months of 2016, more than 5,100 new apartments--mostly market-rate apartments--opened in the heart of the city. Right now, more than 7,200 new apartments are being constructed around Boston. Thanks to this surge in new apartments, renters can finally afford to be somewhat picky. Indeed, we are increasingly seeing landlords dangling extras to try to attract new tenants. Some are offering gift cards. Others are offering one or more month of free rent. Still others are offering to cover renters' broker fees. If this trend continues, renters may finally be in the driver's seat in the city for the first time in years.
While rental prices appear to be dropping in the heart of the city, which is where the vast majority of new apartments are being built, they are still rising in other areas--especially in neighborhoods that aren't experiencing the big construction boom. Over in Allston/Brighton and Mission Hill, for instance, rent prices have increased by 8 percent since last year. In Malden, rent prices have increased by 5 percent since 2016. This is creating some frustration, as many renters are priced out of downtown and look farther afield only to find that rent prices are still increasing there.
Another complicating factor is the fact that all of this demand for housing is causing a major increase in the cost of land and construction. Developers are becoming more and more concerned about the financial feasibility of some of their projects. If rent prices stop rising or even drop, many projects could be thrown into uncertainty. Unfortunately, land and construction prices have especially spiked in outer neighborhoods of Boston, which is where more inventory is sorely needed. If this situation doesn't change, we could see a major slowdown in new construction and yet another major spike in rent prices.
Still, there are plenty of signs that the rental market will stay in good shape for the time being. Avalon North Station, a new 38-story residential tower that opened in November 2016, had already leased 85 of its more than 500 units as of the beginning of 2017, which is a very positive sign. Landlords at other developments are reporting that there is still plenty of demand in most areas. The biggest concern is that competing factors could prompt another major surge in rental prices, which would price even more people out of the city and further complicate the real estate market.
In many ways, Boston is in the midst of some pretty interesting growing pains, and rent prices and vacancy rates for apartments around the city reflect this. Of course, it is very stressful for renters who are trying to figure out where to live. If you are in the market for an apartment now or will be in the near future, pay close attention to what is happening with rent prices. Boston City Properties can keep you up to speed about the latest developments, so check back often.
When you are ready to find an apartment to rent in the city, do yourself a favor and sign up for free access to our searchable real estate listings. It's the best way to check availability for apartments for rent around the city. We also have real estate agents in all Boston neighborhoods, and we can put you in touch when you are ready to proceed. For more info, please call Boston City Properties today.
Our website provides FREE access to the largest real estate database in the Boston area! This database includes not only our listings, but literally ALL of the largest real estate brokerages in the Boston area post listings to the system as well!
Listings Updated Daily!
