Boston’s apartment rental market has experienced unprecedented price increases over the past two years. The average rent price for a Boston apartment is up an astounding +20.56% since April 2022 amid a resurgence in apartment demand and a shortage of available housing units. The cost of renting an apartment has never been higher in Beantown, leaving many to wonder when relief will arrive for renters in Boston. Our poor national energy policy with soaring gas prices helped spark inflation that sent nearly every aspect of construction and renovation pricing far higher. Labor prices soared and here we are with record-low development of apartments in Boston.
Several other socio-economic factors are causing uncertainty as we look towards the future of the local rental market. The ever-threatening politics of whispering future rent control measures has developers placing their capital in other high-growth cities around the country where they believe they can recapture their risk capital in this inflationary environment.
Boston is a unique market.
There is always demand for Greater Boston housing but onerously high affordability requirements in the development deals themselves cause builders to pause or walk away from approved plans because the deals simply do not pencil. Asking for even 15% of a builder’s unit count in a development deal to be affordable makes nearly almost every construction fall flat. Interest rates are also high and the cost of borrowing is another hurdle in a simple math equation that is loaded with risk. The great irony of pushing developers to add more affordable units into their mix causes less development which in a twisted way halts production and keeps prices high. That pesky supply and demand thing never fails to be extremely accurate in how it dictates pricing.
It’s been clearly evident that our policies of creating supply are not working in this economic environment; but is there a possibility that rent could go down…