After a flat year, Greater Boston’s rents are starting to rise again
With the spring real estate market blooming, rents in Greater Boston are again accelerating, though it’s not yet clear if that’s a blip or a longer-term trend.
New figures from several real estate data firms show the price of an apartment in the region is on the upswing after staying relatively flat over the last year or so. It’s a sign that strong demand continues in the region’s housing market and raises the question of whether Boston needs to build even more places for people to live if it hopes to make a meaningful dent in what are some of the nation’s priciest rents.
In the first three months of the year, the average rent for an apartment in Greater Boston rose to $2,152, up 4 percent from a year prior, according to the real estate firm Reis Inc. That was the quickest pace in nearly two years and far faster than the 1 percent growth rate of this time last year.
Other market-watchers, such as ApartmentList and RentalBeast, also showed rent increases picking up speed over the last year.
That comes amid a bit of a lull in the region’s wave of housing construction — at least in terms of new apartment buildings opening — even as the ranks of renters continue to swell, thanks to strong job growth and a wave of baby boomers downsizing into apartments.
Those older tenants, along with thirtysomethings who would consider buying a home but can’t find one in Boston’s drum-tight market, are willing and able to pay higher rents, said RentalBeast president Ishay Grinberg. It’s those deeper-pocketed renters who are now driving demand — and prices — for many newer buildings.
“A lot of these buildings now are almost aimed at boomers,” Grinberg said. “They have a lot of cash, as opposed to someone who just graduated from college.”
Meanwhile, the rising cost of housing in long-popular neighborhoods in Boston’score is pushing younger, not-quite-as-affluent renters to new neighborhoods and suburban towns where they, in turn, are also driving up prices. That’s pushing rents up far faster in neighborhoods such as Dorchester and Mattapan than in areas closer to downtown.
Still, there may be some relief coming this summer, when a wave of new buildings open. More than 20 large apartment buildings — about 7,200 apartments in total — are set to open in and around Boston this year, according to the real estate data firm CoStar. They range from a 585-unit building on Harrison Avenue in the South End to 230-unit buildings in places like Revere and Randolph.
New supply has dampened price growth over the past couple of years, and it should help keep a lid on additional increases this summer, said Mark Hickey, an economist in CoStar’s Boston office.
“We have more inventory growth right now than we have had in 30 years,” Hickey said at a recent talk on the rental market. “The most since the 1920s, maybe.”
The benefits of that new supply are concentrated at the top end of the market, for people who can afford $4,000 for a one-bedroom apartment, but they’re beginning to filter down. As new buildings offer a month — sometimes two — of free rent to help fill their units, older landlords are considering concessions too, just to keep up.
More landlords with smaller properties are willing to cover brokers’ fees, for instance, instead of having tenants pay them, to negate an advantage that many large new buildings have because they don’t use brokers, Grinberg said.
“There’s so much new inventory, it’s scaring some of the smaller landlords,” he said. “They feel like they’re unarmed.”
Across the broader market though — away from the glitzy new buildings in the Seaport and the South End — rents are clearly on the rise.
Sheila Dillon, chief of housing for Boston Mayor Martin J. Walsh, said policy makers are puzzling over whether the city’s target of 53,000 new housing units by 2030 might need to be raised to meet job and population growth that has exceeded earlier expectations.
She’s also working with mayors of cities and towns close to the city on a broader regional goal, for what is increasingly a regional problem.
“We still know we don’t have enough supply,” Dillon said. “We need to keep building to stabilize the market.”