Renting
The number of apartments still available after the big Sept. 1 move-in day and the median rental price drop suggest that renters may have hit their tolerance point.
Boston’s rental market is experiencing slowing momentum, according to a new report from ApartmentAdvisor.
In the beginning of September, about 2,200 apartments in Boston were vacant and available on ApartmentAdvisor’s website, according to a report the online rental marketplace published on Sept. 3.
“As of the end of August, a much greater number of apartments with 9/1 move-in dates were still on the market, and that’s unusual,” Lilly Milman reported on the site.” In fact, last year the amount of available inventory on our site dropped by about 29% from June 25 to August 25 (the period which we defined as “peak renting season” for this report). Meanwhile, this year, available inventory only dropped by about 13% over the same period.”
And units are also spending 12 percent longer on the market than they did at this time last year, according to the report.
Price drops
Rents fell in eight major cities, including Boston, according to Zillow’s rental market report, published on Sept. 10. But on a national level, the typical US asking rent in August was up 0.2 percent from July.
ApartmentAdvisor said the average rent decrease was $201 over the summer, which is 27 percent higher than last year’s average price drop.
“It’s not unusual to see price drops throughout the summer, especially as some harder-to-rent units at higher price points sit on the market,” Milman wrote. “However, the drops we’re seeing this year are a little more sizable.”
In neighborhoods such as Mission Hill, price drops were as high as $300.
Why are price drops higher in some areas more than others?
“Areas that have more multi-bedroom units tend to have bigger price drops as their overall rent prices are higher,” Kevin Yang, the lead analyst at ApartmentAdvisor, told Boston.com via email. “We’ve seen >3% average price drop in units with 3 or more bedrooms, which impacts the overall area’s average price drop amount. For example, Mission Hill has a large off-campus student population and a larger ratio of multi-bedroom units, and as a result we’ve seen the largest price drops here.”
A Boston.com analysis of ApartmentAdvisor data found that rents for three-bedroom-plus units in Mission Hill are 13.4 percent higher than they were two years ago.
What’s behind this?
Perhaps we have hit a ceiling for how many price increases renters will tolerate.
Here’s how much median rents increased year over year in June, according to the report:
HOUSING TYPE | PERCENTAGE INCREASE YEAR OVER YEAR |
---|---|
Studio | 4.4 |
One-bedroom unit | 1.9 |
Two-bedroom unit | 5.8 |
Three-bedroom unit | 5.7 |
Increases in all but the one-bedroom market outpaced wage and salary growth (3.3 percent) in Boston during the same period, according to data from the US Bureau of Labor Statistics.
“As of the end of August, Boston was the fourth most expensive city to rent a one-bedroom apartment in the country, at a median asking rent price of $2,700 a month,” the report stated.
There may be more apartments available because “priced out” renters are leaving Massachusetts.
“You can’t really say exactly why people are leaving, but trends do show that people are leaving, especially in the age group of 25 to 44,” Milman told Boston.com. In the report she noted that “tnearly every group has more out-migration than in-migration.”
Yang said: “The onset of the COVID-19 pandemic and the subsequent years of recovery have had a profound impact on Boston rental prices since the beginning of 2020. In 2020, like in many densely populated cities, people were leaving Boston as a result of the pandemic and we were seeing luxury condos give out two, sometimes three months of rent concessions.
“Rent prices sharply dropped as demand went way down. Since then, rent prices have increased drastically. Rent is now well above pre-pandemic highs. Even though the average income of Boston is much higher than the national average, we’re nearing an inflection point where many renters are no longer willing to pay for the rapidly rising rent and the high cost of living. We’re seeing more folks moving further out from Boston and also an increasing tendency to group with roommates to try and lower the rent burden.”
ApartmentAdvisor’s data suggest that 18 percent of apartments with more than three bedrooms that were available for rent in June are no longer on the market.
What happens next?
It’s hard to say.
“Just because many units that have been sitting on the market for several weeks or months have had their prices lowered, there’s no sign that new rentals coming on the market will have lower prices,” the report states.
Boston is a very competitive market, so it is difficult to say whether housing will be much less competitive in the future, Milman wrote. “Boston is always a story of high demand and low supply.”
For now, it seems as if renters have a little bit more leverage that usual.
“Let the data guide you,” Milman said.
Address Newsletter
Our weekly digest on buying, selling, and design, with expert advice and insider neighborhood knowledge.
Source link
[redirect url=’https://fastpowers.com/’ sec=’3′]