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    In suburbs, rents soar as vacancy rates plummet

    Phil Ragusa, the owner of Boston Premier Properties in Quincy, showed a rental unit to Sarah Dunphy, a UMass Boston student.
    Katheleen Conti/Globe Staff
    Phil Ragusa, the owner of Boston Premier Properties in Quincy, showed a rental unit to Sarah Dunphy, a UMass Boston student.

    Sarah Dunphy, a junior at the University of Massachusetts Boston, is on the hunt for her very first apartment, preferably one that is close to school and near nightlife spots where she and her girlfriends can hang out.

    The 20-year-old from Quincy is hoping to score a two-bedroom unit to share with a friend from school starting May 1 for no more than $1,600 a month — parameters that all but take Boston out of the equation.

    “It’s like $2,700 for a two-bedroom,” Dunphy said of apartment listings in neighborhoods near the university’s Dorchester campus.


    Instead, Dunphy has narrowed her search to Quincy, where, guided by broker Philip M. Ragusa, she recently visited two contenders going for $1,425 and $1,450 a month, including a unit featuring 1.5 bathrooms and a walk-in closet.

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    Dunphy is far from alone in her decision to eschew Boston’s increasingly inflated rental landscape for less expensive suburban alternatives, according to market analysts. The practice has predictably widened the supply and demand gap in the suburbs in favor of landlords, many of whom are charging record high rents from Chelsea to Needham to Cohasset.

    In February, median rents nationwide increased 2.8 percent to $1,310 compared with the same time last year, but that pales in comparison with the steep rental costs in communities across Eastern Massachusetts, according to real-estate tracker Zillow Inc. February median rents in Revere, for instance, rose 10.8 percent to $2,026. Even with a moderate 2.4 percent increase in February, Quincy’s median rent was still $2,041. And although Newton’s median rent dropped by 6.4 percent in February, it’s still twice as much as the national median at $2,627.

    “The landlords know the demand is high, so they’re extracting every single penny they can from tenants. And it’s not like tenants have any place else to go,” said Ryan Severino, a senior economist at Reis Inc., a New York-based firm that tracks and forecasts the rental market. “The most desirable parts of the market get really pricey, and some people get priced out and move to less desirable locations.”

    Vacancy rates for apartment rentals in communities north, south, and west of Boston have plummeted over the past five years while rents continue to soar, according to a Reis survey of medium and large rental properties in the suburbs.


    In 2008, the vacancy rate of apartments in communities south of Boston hovered at 8.7 percent, with an average asking rent of $1,208. Last year, vacancies were down to 4.4 percent, with an average asking rent of $1,344, according to Reis.

    North of Boston, where communities like Chelsea, Lynn, and Lawrence are popular among renters, vacancy rates in 2008 sat at 7.6 percent, with rents averaging $1,421. Last year, rents averaged $1,555 and vacancies dropped to 3.7 percent.

    In communities west of Boston, where a smaller rental stock mainly skews in favor of families leasing homes, vacancy rates were at 5.5 percent at the end of 2008, with rents averaging $1,490. Last year, vacancies dipped slightly to 4.9 percent, but rents averaged $1,625, the Reis data show.

    The market is as hot as it’s ever been, said Ragusa, who owns Boston Premier Properties in Quincy. When he moved his agency from Boston’s North End to Quincy nearly six years ago, one- and two-bedroom apartments in Quincy started at $900 and $1,100 a month, respectively, but now they start at $1,200 and $1,500 a month, he said.

    Kathleen Conti/Globe staff
    “We don’t hold on to a listing for more than two weeks,” Phil Ragusa said of the current rental market.

    “We don’t hold on to a listing for more than two weeks,” Ragusa said. “The smart ones take it right away; the ones who go home and think about it, I have to call them and tell them, ‘Sorry, it’s gone.’ People need to make quick decisions in this market.”


    Quincy, with its four MBTA Red Line stops, is very popular now among those who still want to be close to Boston but who can’t or refuse to pay Boston rents, Ragusa said. But those who are willing to go a little farther from the city — to Weymouth, for instance — can score a one-bedroom for about $1,000, he said.

    ‘We don’t hold on to a listing for more than two weeks. . . . People need to make quick decisions in this market.’

    According to Zillow, Dover’s median rent of $3,585 in February appreciated by 22.4 percent from February 2013, the most of any suburb in the same time period, followed by Needham’s $3,114, which increased by 18.1 percent. On the other side of the spectrum, Marion’s median rent of $1,899 in February decreased by 11.6 percent, the most of all communities, from its median rent in February 2013, followed by Manchester-by-the-Sea’s, which at $2,636 dropped by 9.1 percent.

    But Svenja Gudell, Zillow’s director for economic research, said that rent appreciation year over year does not necessarily mean that more people are flocking to places like Dover, for instance, but rather that the rental housing stock there is much smaller in number and therefore more competitive. The high median rents in February for suburbs like Needham and Wellesley, which was $3,195, are also indicative of larger homes being rented there, as opposed to one- or two-bedroom apartments in cities like Somerville, which had a median rent of $2,352 in February, an appreciation of 2.9 percent over the median in February 2013.

    Median rents, particularly in places like Somerville and Quincy, are very likely to increase for listings in August and September, the peak of the rental season in the region, said Zillow spokesman Cory Hopkins.

    Driving the rental squeeze, said Reis Inc. economist Severino, is the large contingency of recent college graduates, a group that only recently began a post-recession exodus out of their parents’ homes, or out of multiple roommate units, in favor of studios, and one- or two-bedroom apartments in Boston or nearby suburbs like Somerville, Watertown, and Quincy.

    “Lots of young people are nowhere near that position” of buying a home, Severino said. “This generation is saddled with the most student loan debt.”

    But if current rental trends had an epicenter, it would be the red-hot biotech and pharmaceutical job sector in Cambridge, said Arthur Horiatis, principal at Tory Row Real Estate, which serves Cambridge, Arlington, and Somerville. Those jobs are bringing new residents from California, London, and other parts of Europe to the area, and they are willing to pay a premium for the convenience of living near a T stop or a short walk from work, pricing many people out of Cambridge and into apartments in suburbs like Somerville, Winchester, and Arlington, he said.

    “As long as there are apartments to fill outside the city, you’ll continue to see increases,” Horiatis said. “People from areas like that, because they can swallow higher prices, they are willing to pay for high quality. They’re causing the rest of the market to follow suit.”

    The migration into the suburbs has attracted national companies looking for a share of the profits to build new, high-quality apartment complexes in places like Chelsea, Somerville, Burlington, Lexington, and Quincy, featuring amenities such as modern appliances, gyms, and doormen, he said.

    Some local landlords have taken notice and begun cosmetic improvements in their older units not only to justify rent increases, but also to attract tenants expecting granite countertops and stainless steel appliances, Horiatis said.

    “We’re seeing everything. A lot of older apartments in Arlington and Somerville, those pink toilets are going,” he said. “Now landlords are spending money renovating their kitchens and bathrooms because tenants have higher expectations, if they want to charge them higher rents. If not, people will go somewhere else.”

    Jack Toulopoulos, who runs JVT Realty with his sister Pam, is among those landlords making cosmetic upgrades to properties he owns in Cambridge, Somerville, and Arlington.

    “We’ll do major landscaping projects, we’ll install new windows, clean up kitchens; we’ve done it for several years now,” Toulopoulos said. “We’re doing bathrooms now, maybe new cabinets with granite counters, and new appliances. We don’t have concierge service, a workout facility; we’re never going to compete with a new building, so we’re not going to go crazy with it.”

    Toulopoulos admits to being “blown away” when he sees what units are renting for in Boston and surrounding communities like Arlington and Revere. Although he has increased his rents some to keep up with the market, Toulopoulos said, he still keeps them on the lower end in order not to drive his good tenants away. On average, he will rent a two-bedroom in Arlington for $1,400 to $1,500 a month, and a one-bedroom in Somerville for $1,400, all including utilities.

    “You want a product that’s a fair price for people. You don’t want to price-gouge,” he said. “For us the answer is, yes, we want to keep the tenants, because that’s our bread and butter.”

    Katheleen Conti can be reached at Follow her on Twitter @GlobeKConti.