By Zach Parker
The local apartment rental market in Boston has had a tumultuous 12 months since January of last year. A year ago, the city was experiencing record low vacancies along with record high rent prices. It was one of the hottest housing markets in the country, with rent prices mirroring those of New York and San Francisco.
Fast forward a year later, and the market is starting 2021 in a much different position. The global pandemic has caused widespread vacancies in Boston. Rent prices have been tumbling as vacancies soar to levels not seen in years. Many locals are wondering what’s in store for 2021.
The vacancy rate currently sits at 7.36% according to the data provided by Boston Pads. That’s a 484% increase since January of last year. The local markets nearest to the downtown and the local universities have seen the biggest impact overall. The only three neighborhoods in Boston where the vacancy rates haven’t more than doubled is Mattapan, Dorchester, and Hyde Park.
These interesting data trends suggest two things for the 2021 rental market in Boston.
First, local universities must return to providing education in a classroom setting. Boston’s rental market is so tightly hinged on the student population that 60% of all apartment rentals in Boston begin and end on Sept. 1, which coincides with the beginning of the fall semester. Between the travel ban preventing international students from coming to Boston and the decisions of most of the areas universities to adopt remote learning, the effects on the Boston housing economy were destructive to say the least.
Second, the overall trend for 2021 will be higher demand for housing in the suburbs and more renters wanting staying away from the hustle and bustle of the downtown. The highest vacancy rates in Boston right now belongs to the downtown at an unprecedented 20.40%. Nearby North End, Beacon Hill, and West End are not far behind, all of which saw an increase in vacancy rate by 400% or more. Historically these areas have had the lowest vacancy rates and the highest demand, but that all changed in 2020. Now, the lowest vacancy rates in the city belong to the neighborhoods of Roslindale, West Roxbury, Hyde Park, South Boston and Dorchester, all of which lie on the outer limits of the city.
In terms of overall market health and recovery, the availability rate is a good indicator of what’s coming down the pipeline in terms of vacancies for a given market. The availability rate includes units both currently vacant as well as those that are not, but available for rent as tenants have notified their landlords of their intent to vacate. When the availability rate is very high, it suggests that vacancy rates are going to rise in upcoming months because new renters are filling those available units.
The current availability rate in Boston is 8.99%. The availability rate is only 1.66% higher than the current vacancy rate, which suggests that new apartments that are becoming available are getting rented out rather quickly. This could be a sign of optimism for upcoming months as it suggests that we’re close to flattening the curve in terms of vacancies.
Overall, it looks like the rental market will bounce back strong in 2021 assuming one thing. If the local universities should resume normal classes in the fall, bringing the student population back to Boston, we should see the market bounce back considerably. It may even spur many local landlords to make updates to unfilled units, providing better quality of inventory for renters overall.
Our present market is experiencing an unprecedented shortage of inventory. If you are thinking of selling your home in the next 12 months now is the time to get started… call me today. 508-735-5161. My extensive knowledge and expert guidance will enable you to achieve all of your real estate goals. [email protected].
Elaine Quigley, CBR, CRS, GRI
Cell: (508) 735-5161
A member of the franchise system of BHH Affiliates, LLC.