2023 Cambridge Apartment Rental Market Report
The apartment rental market in Cambridge MA is currently experiencing a historic shortage in apartment supply. After experiencing record low vacancies and apartment availability throughout all of last year, rental inventory in Cambridge is pushing even lower thus far in 2023. Both the real-time availability rate (RTAR) and real-time vacancy rate (RTVR) for Cambridge apartments are down by double-digit margins while the average rent price is at a record high. Here are the main trends driving the rental market in Cambridge in 2023.
Record Low Inventory of Cambridge Apartments
The current RTVR in Cambridge, MA is 0.51% which marks a -38.55% drop compared to a year ago. Cambridge’s vacancy rate fell to an all-time low of 0.30% in late July last year amidst growing renter demand and a limited supply of apartments. Now, the RTVR in Cambridge is at a historic low for March, indicating that it will likely hit a new all-time low this summer as we approach September.
The real-time availability rate (RTAR) for Cambridge is currently 2.54%. That figure is down -11.50% compared to early March 2022. Apartment availability in Cambridge typically peaks in May. Based on the most recent Cambridge apartment data, it looks like RTAR is just starting to enter into its seasonal climb as units are becoming available. Last November, Cambridge’s RTAR hit an all-time low of 0.80%.
The highly anticipated tech layoffs haven’t seemed to arrive yet in numbers that would push our availability rate higher. Whether or not that changes in the near future could depend, to some degree, on additional fed hikes and energy costs. Considering that Cambridge is such a tech- heavy epicenter, it appears that it is holding up far better than most media pundits predicted.
With apartment supply figures so low, it’s putting upward pressure on rent prices in Cambridge, which was already Greater Boston’s most expensive suburb to rent an apartment to begin with. With unacceptably high energy and gas prices, coupled with high labor costs, it is unlikely that we will see rental pricing relief anytime soon. It might be time for policy makers to focus on vastly increasing supply of energy and fuel to bring down costs which landlords can deliver to the consumer.
Cambridge Average Rent Prices
The current average rent price in Cambridge MA is $3,232. That figure is at an all-time high and has increased by +14.95% compared to a year ago. Last May, Cambridge surpassed its previous all-time high in average rent when it hit $2,955. It has since gone up $278 and is showing little signs of slowing down.
2023 Cambridge Apartment Rental Market Forecast
With apartment supply figures so low and continuing to push lower, it does not appear like rent prices in Cambridge will fall in the foreseeable future. The area is desperate for new inventory, but without a massive influx of new multifamily housing the short-term outlook does not look optimistic for Cambridge’s supply issue. Additional zoning reform is needed to increase smart growth, height, and density.
With inflation still above the Fed’s target, interest rates will continue to rise over the next few months which will most likely push would-be buyers towards renting. This will cause more renters to renew their leases that would have otherwise purchased their own home. This additional renter demand will further exacerbate the current supply crunch we’re experiencing, which will only work to increase prices further. The city must do everything in its power to increase the number of new housing units to meet growing demand. There also has to be a keen focus on increasing supply of energy and driving that cost down to tame inflation. There is no escaping bad energy policy as it ripples through all aspects of every day life, in all segments of the economy.
Unfortunately, city officials indicated they are currently prioritizing rent control over new housing unit creation as a means to combat rising rent prices, following Boston’s lead. This will only further disincentivize developers from building new units in the metro area, who are already experiencing soaring construction costs due to high energy prices and rising interest rates. Focusing on demand destruction has never worked in any city and always leads to less choices and older housing which eventually drains talent out of our area.
Cambridge has been a prime target for new venture capital over the past decade, which has put extreme demand pressure on the already limited supply of housing units. The only way out of the current situation is to pave an easy path for developers and landlords to add to Cambridge’s inventory of housing units. Affordable housing providers need to push back on all the NIMBYism that slowing down the supply chain of new housing stock. We will continue to monitor these housing trends as they develop.