Boston rents could slow down in 2020.
Years of rising rents in the Boston area have reached a point that even $4,000 a month is barely enough to secure a unit in the high-end market closest to the city core.
High-end market units close to Boston, with many more expected to come online this year, currently command monthly rents ranging from $5,000 to just over $10,000, said Carlina Nabatoff, co-owner of Abundant Real Estate Group in Cambridge.
As area tenants are painfully aware, rent hikes haven’t just been reserved for the luxury market. The average rent in Greater Boston for the last quarter of 2019 was $2,349 in all apartment categories — that’s up from $2,223 the prior year and $2,117 in 2017, according to data from Reis Inc., a real estate research firm.
It’s the fourth-highest average rent nationwide, behind New York ($3,599), San Francisco ($3,153), and San Jose ($2,630), among the 79 major metro markets Reis tracked.
Market observers forecast that Boston-area rents will continue to rise in 2020. But there is some good news: The influx of new units set to come online this year is expected to ease the crunch and help slow down the rate of rise.
“It’s very often the case that newly constructed rentals are marketed for the higher end of the income distribution among renters,” said Jeff Tucker, an economist
with real estate website Zillow. “It’s more likely to help slow rent increases in the older units.”
Average rents in Greater Boston rose 4.2 percent over the course of the past year, compared with nearly 5 percent growth in 2018, according to Reis figures. Zillow anticipates a “slow, but steady increase” of 1.3 percent this year, Tucker said.
“For renters, that’s better news than hearing that it’s going to climb by 5 percent,” he said.
Another encouraging sign for renters is that there are more apartment listings than there were at this time last year, and it’s taking longer to rent them, Nabatoff said.
“Because there is more inventory, [landlords] have to make [their] place attractive to rent,” said Nabatoff, whose firm serves the Cambridge/Somerville area,
including Malden, Medford, Everett and Revere.
This is a change from recent years, when the rental inventory, especially for midrange units, has been tight and highly competitive. Greater Boston ended the year with an average rental vacancy rate of 5 percent, slightly higher than the national average of 4.7 percent, according to Reis.
A low inventory of homes for sale has been throwing a wrench into the rental market for years, said Tim Warren, chief executive of The Warren Group, a real estate analytics firm and publisher of Banker & Tradesman.
“The number of homes on the market and listings have been consistently declining for a long time, which cuts down on the choice people have,” Warren said.
“And combined with rising [home] prices, it’s going to naturally push people into apartments if they can’t find homes.”