There’s a bit of good news for renters stretching to afford Greater Boston’s sky-high housing market: At least it’s not getting worse.
Monthly rents barely increased in the first quarter of 2016, according to a report out Tuesday, as a wave of new apartment buildings competed for tenants.
Make no mistake: Boston is still one of the most expensive rental markets in the country, trailing only New York City, San Francisco, and San Jose, Calif. And rents aren’t going down. But after five years of steady increases, they appear to be taking a breather.
The average apartment in Greater Boston fetched $2,017 a month in the first quarter of the year, according to the real estate data firm Reis Inc. That was up just one-tenth of a percent from the fourth quarter, the slowest gain Reis has recorded in the market here since 2011. It came as vacancy rates remained above 5 percent for the fourth straight quarter, amid a surge of new apartments hitting the market last year.
Those new buildings are competing for the same pool of well-heeled renters. And as more hit the market, landlords are increasingly competing for tenants with concessions of a free month, or even two.
A slowdown is not unusual at this time of year. Boston’s rental market typically peaks Sept. 1, when students and many young adults turn over their leases. Winter is often a soft period, said Lauren Jezienicki, vice president of Bozzuto Development Group, which builds and manages apartment buildings in the area. But this winter was softer than usual.
“There have been more concessions being offered,” Jezienicki said. “I think a lot of it is due to the new supply coming on line.”
More than 3,800 apartments opened in Boston last year, according to city data, and nearly 5,000 more are permitted for construction. Both figures are the highest in at least two decades, and building apartments in some suburban towns is also at longtime highs.
But construction takes time, and the number of apartment buildings set to open in 2016 is smaller than in 2015. Developers are adapting to the market by shifting more new development toward for-sale condos. And many are moving away from core Boston neighborhoods to areas where construction costs — and rents — are a bit lower, in a bid to attract a broader range of apartment-hunters.
Bozzuto manages a new apartment building on Burgin Parkway in Quincy, across from Quincy Adams Station on the MBTA’s Red Line. Even though it’s the off-season, Bozzuto has leased 20 units a month, Jezienicki said.
“People are paying several hundred dollars less every month” than they would in downtown Boston “for really good new product,” she said. “Our first indications have been encouraging.”
Later this year, AvalonBay Communities, which owns 37 properties in Greater Boston, expects to begin leasing apartments in the 38-story, 503-unit tower under construction at North Station. While the company reported slower rent growth in Boston in 2015 than elsewhere in the country, chief operating officer Sean Breslin said recently that he remains bullish on the local market.
“Boston has been performing well. Job growth has been steady. And supply is expected to decrease this year, relative to 2015,” Breslin said on a recent investor conference call. “There is probably a little bit of potential upside in Boston.”
Of course “upside” for a developer means higher rents for tenants. And builders keep making that bet. In just the last week, developers filed notices with the city for three major housing projects, in the South End, the Back Bay, and Downtown Crossing. All are banking on continued rent increases.
All of which raises the question of how long the current slowdown might last, and whether Boston’s already high housing market will again go higher.