Author: Tom Acitelli
Date: June 2, 2015
A new report from New York University's Furman Center on the states of rental markets in major U.S. cities pretty much confirms what we already knew about Greater Boston: that renting here is a nightmare. It's not merely the higher costs compared with pretty much every other region except the New York City and San Francisco areas. It's the scarcity of available apartments to rent. And yet there is a blindingly bright silver lining in it all.
First, the scarcity. As the Furman study makes clear, Boston's rental inventory only tightened from 2006 through 2013, the years covered, descending a full 2 percentage points from an already clenching 5.5 percent. Of the major cities surveyed, only San Francisco saw such a further tightening.
This scarcity of apartments has helped drive Boston-area rents ever higher. The region's perennial desirability as an academic, tech and biotech hub has not helped matters: More and more people want to live here (despite the winters!) and the housing demand, for a variety of reasons (poor public policy, high construction costs, low-density land use for generations now), far outpaces the supply every year. The rental population in the region grew 23 percent from 2006 to 2013.
Even the historic residential-building boom under way is unlikely to alleviate things for most tenants, at least not anytime soon. Perhaps in two or three years; but your next apartment hunt will surely confront this grim economic tableau of high demand and low supply. The two major reasons for this are that for-sale housing, particularly condos, remains astronomical by the standards of almost any American region besides, again, New York and San Francisco. Also, much of the new rental development is at the higher-end (see graphic above about the affordability of newer units). Studios costing $2,500 a month are not the solution. Nor are micro-apartments costing more than that. Whatever goes up tends to get snatched up and fast; and what's leftover is unaffordable for many.
Or is it?
Here's the silver lining of sorts. The Furman Center report notes that fewer tenants in the middle of the market were rent-burdened in 2013 compared with 2006: "In 2006, 40 percent of moderate-income Boston renters were severely rent-burdened, the highest share among the cities we studied and significantly higher than in New York City, which had the second-highest share (33 percent). Yet, by 2013, that share in Boston had dropped about seven percentage points, to just under 34 percent—the fifth-highest proportion in 2013." (A household is rent-burdened, according to the survey, if the gross rent is greater than or equal to 30 percent of the household's income; it's severely rent-burdened if it's greater than or equal to 50 percent of income.)
In a nutshell, Boston-area tenants are making more, so the higher rents are not hitting many of them so hard. The median renter's income in Boston, according to the survey, "grew nearly four times as much as rents" from 2006 through 2013. Now, if you're not one of these tenants with a rapidly ballooning income, then we've just ruined your day (sorry). It's just that there is an apparently deep pool of plausible tenants for these $2,500 studios. Maybe that's it: Until the local economy goes south, rents will continue to go north. Fingers crossed?