The apartment rental market in Watertown, MA is significantly more expensive in 2023 compared to a year ago. The availability rate of Watertown apartments is up by a large margin year-over-year after hitting all-time lows in August of 2022 as demand for apartments just outside Boston reached its peak. Despite the large increase, supply figures are still well below historical averages in Watertown, causing rent prices to spike by +20.83% year-over-year. Here are the trends affecting Watertown’s apartment rental market in 2023.
Rental Supply Absorption Slow in Watertown MA
The current real-time availability rate (RTAR) in Watertown is 1.94%, considerably higher than its level in early September of last year (0.15%). In fact, RTAR has remained steady through August when it typically drops as we approach September 1. This shows that demand for apartments has stalled in Watertown during what is typically the yearly peak in demand. Watertown’s rental market benefited from a population shift towards the suburbs between 2020 and 2022, but the data indicates that this surge has since stabilized.
The current RTVR in Watertown is 0.67%. That figure is low by historical standards, but still up +737.50% from a year ago when RTVR was 0.08% due to the massive increase in demand. Lower rental prices compared to most parts of Greater Boston was also a contributing factor at the time to the huge spike in demand. Both RTAR and RTVR hit all-time lows in August and September of last year. So while both figures are up considerably year-over-year, they are still lower than what we’ve seen in the years prior to the pandemic.
Even though the vacancy rate has increased significantly year-over-year, it’s still below 1%. This means it is not as impactful as it would seem. Until we observe the RTVR climbing north of 2-3%, there could be next to zero influence on the lowering of any current rental pricing. We will most likely not see any kind of significant pricing changes across a range of units even at a 3-4 percent RTVR unless it was combined with the off market leasing period of the fall and winter months. Depending on a number of variables that can change over time and over different economic cycles, we would likely need to see a solid longstanding 4% RTVR for the difference to perhaps start being material.
According to our latest Watertown rental data, the average apartment is spending 53 days on the market before getting rented. That figure is up +55.88% or 19 days from the median days on market in early September 2019. During that time, Watertown experienced a sharp drop in RTAR which likely contributed to the low average days on market we saw last September. Much of this longer duration of apartments staying on the open market was due to landlords seeking significantly higher prices due to renovations and market conditions.
Average Rent Prices in Watertown MA
The average rent price in Watertown, MA is currently $2,862. That figure is up +20.83% compared to a year ago, one of the largest increases in average rent price out of all the suburbs in Boston. Watertown is now more expensive to rent an apartment than Somerville, where the average rent price sits at $2,860. This never used to be the case. Watertown nearly always looked at as one of the most affordable places to rent an apartment over the last two decades. What changed? Could new establishments coming to Watertown have helped drive prices up?
Arsenal Yards, in particular, has become a booming part of Watertown- no doubt contributing to the popularity of the neighborhood, and in part to the rising prices. With everything from popular grocery store Roche brothers to retail shops like Old Navy, it is often so packed with people that parking has become more difficult than it was in the past. There are also a lot of trendy new restaurants in there as well making it by far the hottest spot in Watertown. The mall also organizes seasonal events, which Watertown residents can enjoy.
Watertown Rental Market Forecast 2023 And Beyond
Last year’s unprecedented surge in apartment demand was the catalyst that resulted in the surge in rental prices in Watertown. As rent prices climbed in many of Boston’s suburbs last fall, Watertown had offered renters a more affordable option. This likely led to RTAR and RTVR plummeting in fall 2022, which in turn caused rent prices to climb at an even higher margin in 2023.
The affordability that attracted so many renters over the last year has all but dissipated, and now Watertown is just as expensive as some of Boston’s most sought after suburbs. We expect demand to cool in Watertown over the next year, but rent prices aren’t likely to drop over that time period. Demand for rentals is still extremely high in Boston, and average rent prices in Watertown remain a few hundred dollars less per month than the city of Boston.
Despite the high marginal increase in RTAR and RTVR in Watertown, supply figures are still low compared to earlier years, which indicates the market is still healthy and viable for future growth should economic conditions not worsen. Expect prices to flatten or slow in growth the next year. Corporate layoffs could occur in the event that the economy deteriorates, which would increase unemployment and reduce demand. Rent costs would most likely decrease as a result, but not for the reasons that anyone is hoping for. It is getting quite challenging to predict some apartment leasing markets due to the conflicting economic messages we are seeing out in the broader economy. We will continue to monitor these trends as they develop.
If you are a property owner or landlord looking for apartment leasing or multifamily sales advice; please feel free to reach out to me directly.
Published September 19, 2023
Demetrios has pulled together the largest apartment leasing team in the Greater Boston Area and is responsible for procuring more apartment rentals than anyone in New England – with over 130k people finding their housing through his services. Demetrios is an avid real estate developer, peak performance trainer, educator, guest lecturer and motivational speaker.