Why Boston rent is still high for most
Add Axios as your preferred source to
see more of our stories on Google.
Rent increases for mid-level apartments in Boston outpaced increases for higher-end units at the end of 2023, according to real estate firm CoStar Group, which rates buildings based on design, amenities, location and certifications.
Why it matters: High-rent apartments let developers earn back their construction investment faster than lower-rent spaces. This means more luxury apartments and fewer cheaper places are being built.
- That fuels the housing crunch for middle-class renters.
- If anyone was expecting the apartment market to cool off this year, we have bad news. Bostonians are unlikely to catch a break.
Zoom in: Middle tier rents went up 3.5% in Boston last year.
- Because there are more available luxury units, high-end rents only went up 2%.
The big picture: High demand for more affordable apartments is helping to keep middle-of-the-road rent prices elevated, Jay Lybik, CoStar's national director of multifamily analytics, tells Axios.
- U.S. rents are generally still above pre-pandemic levels, analysts say.
Yes, but: A flood of new construction is pushing down U.S. rents at the high end, where there are often more apartments than renters who want them.
- That means the renters with the deepest pockets are more likely than others to score a deal.
State of play: While the country needs more housing, most new apartments are loaded with amenities in prime locations.
- Some of Boston's recently built high-rises offer rooftop space, pet spas, concierge serve and luxurious common spaces.
Of note: Prices you see in the headlines are asking rents, meaning new leases only.
- Rents usually don't come down for those who aren't moving, Axios' Emily Peck reports.
What's next: It could be a few years before there's enough demand to soak up the excess supply that's overwhelming some markets like Austin, Texas and Phoenix, Lybik says.
- "We've got to get these buildings finished, and start filling them, without having more come online," Lybik says.
What we're watching: The pipeline for new projects is already slowing as developers find it harder to get financing.
Go deeper: Housing was wildly unaffordable for half of renters in 2022, report shows