Across the country and in major cities like Boston, apartment rentals are picking up steam due to a low supply of homes for sale and affordability issues.
According to the U.S. Census Bureau, 52 out of the nation’s 100 biggest cities had more renters than homeowners in 2015. Since 2009, 21 of those 52 cities have been home to a majority of renters versus home owners.
This trend is expected to continue for the next several years. The Urban Institute released a report predicting that the number of people who rent will increase through 2030, citing Baby Boomers who elect to downsize from their homes into smaller apartments as one major factor.
Homebuyers have limited choices
Scarcity remains an issue in most markets, especially in Boston. The Massachusetts Association of Realtors reports that home sales dipped nearly 35% from November 2015 to November 2016. Boston condo sales also dropped 30% during the same timeframe.
The shortage of homes on the market coupled with population growth in the area is increasing competition amongst buyers and forcing many people to continue renting.
Affordability is becoming an issue
Although many Americans lack the financial means to buy a home, renters in Boston are still paying a significant percentage of their income to landlords each month. In 2015, Bostonians paid an average of nearly 35% of their monthly income for rent while homeowners were paying just 21.7% of their income on monthly mortgage payments.
Rising costs and stagnant wages are compounding the issue for renters looking to save enough money to move into a home.
Boston has a plan to improve the housing market
To address the city’s increasing population and demand for apartments, Mayor Walsh’s administration has set a goal of building 53,000 new units by 2030. The state Senate also passed legislation in 2016 to make re-zoning easier – a move designed specifically to create more affordable housing.
There is also a proposal to introduce a workforce housing tax credit that would be governed at the local level.
Although Boston faces a limited housing supply today, new construction projects can be found throughout the city which will give renters more options in the coming years.