2023 Rental Market Trends in Boston
By examining the overall broader statistics and trends, it appears that conditions could be leaning towards a final and modest rental price growth for the remainder of the peak July -August leasing season. The combination of low supply and solid demand are the main contributing factors towards price growth, and those indicate that rents should be going up. That being said, several of our larger property owners have mentioned a significant decrease in showings and calls over the last ten days. This could also be related to the 4th of July falling on a Tuesday which may have created a longer than expected vacation time.
New Construction Numbers Are Lagging
In our last Boston apartment rental market report that we released in January, we reported on a drop in new housing units hitting the market in 2022. Combine that with the disruption that COVID caused in getting new inventory to market during 2020 and 2021, you have the foundation laid down for the critical shortage in housing inventory we’re seeing this year.
We emphasized how important it would be this year that we regain the new construction numbers we were seeing prior to the pandemic. So far, that has not been the case in 2023. Only 83 building permits have been issued for residential or mixed-use new construction by the BPDA, down from 94 issued last year.
Unless we see a big uptick in new permits issued during the second half of 2023, expect Boston’s rental shortage to only get worse. This will put additional upward pressure on rent prices in 2024 and beyond.
Massachusetts Unemployment Is Falling
One concern we shared in our 2023 Boston apartment rental market report was the national economy and its effect on our local economy here in Boston. We predicted that if the recession worsened and mass-layoffs ensued, it would have a negative impact on rental demand. That has not been the case at all so far in 2023.
After hovering around 4% for most of 2022,…