Why Boston Apartments are so Expensive
Boston apartments have some of the highest rents of any major metro area in the United States. In fact, only New York City and San Francisco are more expensive. Although Boston has recently experienced a building boom, the supply of residential housing remains critically low. Yet, the demand for housing in Boston remains incredibly high. This factors into why Boston apartments are so expensive versus other cities, in the United States and around the world.
The Current Real Estate Sales Market In Boston
Real estate has been historically expensive in Boston. However, sales prices have been through the roof lately. Boston is currently experiencing an incredibly strong Seller’s Market. That means there is higher demand than there is supply of homes for sale in Boston. Some buyers are paying way more money than the asking price. Others are waiving important contingencies that are intended to project the buyer. Many buyers are doing both. So, a great deal of would-be buyers are priced out of the market. They simply can’t afford the exorbitant purchase prices. This segment of people ends up renting instead.
Tenants Have Money To Spend
Although many people can’t afford to purchase real estate in Boston, they still have plenty of money to spend. According to Payscale.com the average salary in Boston, Massachusetts is $80,000. That’s significantly higher than the average salary in the United States, which is $51,916. In addition, tenants in Boston are willing to spend a significant portion of their salary on rent for convenience. For example, if they work in the city, it’s easier to live in the city as well. Many tenants are willing to spend upwards of 30 percent or more of their income on rent for this convenience.
Average Boston Apartment Prices
As you now know, Boston is the third most expensive city in the country. So, how does that affect renters in regard to rental fees? According to Boston Pads Real Time Data the average rent for a Boston apartment is currently….
Studio Apartment: $1,702 per month for rent
One Bedroom Apartment: $2,007 per month for rent
Two Bedroom Apartment: $2,505 per month for rent
Three Bedroom Apartment: $3,045 per month for rent
Four Bedroom Apartment: $3,631 per month for rent
Five Bedroom Apartment: $4,492 per month for rent
Please note that these figures are for average Boston apartment prices as of July 22, 2021.
Boston is Bouncing Back
It’s true that Covid drove down the rental fees a bit during the height of the pandemic. However, prices in Boston are starting to bounce back. According to Boston Pads Real Time Data the average rent for a Boston apartment immediately before Covid was….
Studio Apartment: $1,821 per month for rent
One Bedroom Apartment: $2,188 per month for rent
Two Bedroom Apartment: $2,602 per month for rent
Three Bedroom Apartment: $3,080 per month for rent
Four Bedroom Apartment: 3,719 per month for rent
Five Bedroom Apartment: $4,457 per month for rent
Please note that these figures are as of March 9th, 2020.
As you can see, the average price for a Boston apartment is now nearly back to pre-Covid levels.
Another reason why apartments are so expensive in Boston is due to the fact that the inventory is low. According to Boston Pads the Real Time Availability Rate, or RTAR for short, is currently at 6.91%. That means only 6.91% of the total amount of apartments in Boston are currently on the rental market. In addition, the Real Time Vacancy Rate, or RTVR for short, is now at a low level of 2.14%. In essence, only 2.14% of the total amount of apartments in the city are vacant and available for rent. Those are both low figures to say the least.
Consistently High Demand
Boston is a popular city, and more and more people want to live there. Did you know that the population in the Boston Metro Area has been steadily increasing over the past decade? According to MacroTrends.net the population in the Boston and surrounding suburbs this year is 4,315,00. The population was 4,185,000 in 2010. That’s an increase of 130,000 people over the past decade alone.
Given the high demand and low supply, apartments can be hard to come by in Boston. That’s another factor why apartments are so expensive in Boston.
Boston Ranks High Compared To The World’s Top Performing Cities
There are many good reasons why apartments are so expensive in Boston. Another one is the fact that Boston ranks as one of the top 25 cities in the world. We utilized A.T. Kearney’s 2019 and 2020 ranking of the top 50 global cities in order to determine Boston’s ranking. Boston actually ranked 21st in that index in back to years. The report reveals the world’s top-performing cities and those that have the most potential. Factors such as corporate investment, public policy, and human capital were used to determine the rankings.
Housing Development Rate Verses Job Growth Rate
The housing development rate verses the job growth rate is yet another reason why apartments are so expensive in Boston. Housing officials allowed the permitting of 2.3 new residential units per every 1,000 residents on average from 2008 to 2018. However, the job growth rate increase by significantly more than that during the same period. It grew by an average of 5.8 jobs for ever 1,000 residents. That equals a job growth rate of 2.5 more jobs than new housing units available per thousand people. The bottom line is that there simply isn’t enough new housing being developed in the Boston area. People who are moving to Boston for new jobs are in competition with each other for apartments.
Tenants Are Not Moving
Our final reason why apartments are so expensive in Boston is due to the fact that tenants are staying put. Inventory is low and rents in Boston are high. It makes sense that people are living in their apartments longer. This holds true even if the landlords are raising the rent each year. It’s still more cost effective when compared to moving. However, people do need to move to new apartments for various reasons. For example, you may need more space for a growing family. Perhaps you need less space because a roommate or roommates are moving out on their own. Whatever your reason is for moving into an apartment in Boston it makes sense to conduct some research first.
On that note, if you’re interested in real estate and real estate related topics, please check out the Boston Pads real estate portal at www.BostonPads.com. Here you will find a plethora of tips, tools, and valuable information. Boston Pads is your number #1 resource for everything related to Boston real estate and the real estate scene across the city. It’s the perfect resource for renters, buyers, sellers, landlords, property owners, property managers, and real estate agents. If you’ve been looking for a one stop real estate source then your search is over. Welcome to Boston Pads- find a place you’ll love, guaranteed.