As we approach the half-way point of 2023, Boston’s apartment rental market has reached a new milestone. The average rent price for apartments in Boston has surpassed $3,000 for the first time on record. As of June 1, Boston’s average rent price is $3,047 and up 13.64% compared to a year ago.
Boston’s average rent price is calculated by taking the average of: studio, 1 bedroom, 2 bedroom, 3 bedroom and 4 bedroom prices. To ensure the highest accuracy, these average rent prices exclude luxury apartment buildings which often have wild fluctuations in pricing on a daily basis.
A look at the historical trend line for this average rent figure shows that prices have accelerated significantly once pandemic restrictions were lifted in late 2021. Prices did fall during the pandemic years as rental demand was negatively impacted by distance based learning and remote work. Since apartment demand has returned to Boston, we’re seeing an unprecedented acceleration in rent price growth.
So why is rent price growth outpacing the years prior to the pandemic? There are several forces at play here.
Record Low Apartment Availability
We mentioned this trend in our 2023 apartment rental market report as a main issue affecting Boston’s average rent price. Last year, Boston’s real-time availability rate (RTAR) peaked at 4.97% in late April, marking the first year on record that apartment availability did not surpass 5%. This year, the current RTAR is at 4.32% as of May 1, down -10.74% from last year. That figure typically begins to turn downwards in May, which would mean that in 2023 we saw another year of record low apartment inventory.
Average Days on Market Down For Boston Apartments
Another indicator of rental demand is average days on market for apartments in Boston. According to the most recent Boston apartment data, that figure is down by 33% in Boston compared to a year ago. So not only are there less apartments available, those that are available are getting rented out even faster than they have in previous years.
Total 2023 Real Estate Sales Are Down 28.35% For Boston Properties.
One of the main reasons that demand for apartments has increased so much over the last year is the fact that the Boston real estate sales market has cooled off. Total residential real estate sales through the first 5 months is down by -29.35% thanks to rising interest rates. As interest rates continue to rise, more and more potential buyers have been forced to postpone homeownership and rent instead. This has placed additional demand on an already super tight rental supply in Boston. With landlords in Boston reporting astonishingly high lease renewal rates; this also creates a further strain on supply which causes upward momentum in rental pricing.
Looking forward to the second half of the year, it appears that the current economic climate will continue to push rent prices higher in Boston. Based on the BPDA numbers on new housing units created last year, it doesn’t appear that we’ll be seeing an injection of new housing inventory anytime soon. As long as the RTAR remains at historic lows, rent prices will continue to climb higher. We will cover these trends in more detail in our upcoming Boston Mid-Year Apartment Rental Market Report.
Published June 2, 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.