With apartment availability and vacancies at or near all-time lows, Boston’s average rent price has been accelerating through the first quarter of 2022. Boston’s current average rent price of $2,618 has increased by $70 since the beginning of the year after staying flat throughout all of 2021. At the current pace of price growth, Boston will likely surpass its previous all time high of $2,646 set in June of 2021 before the end of the second quarter.
There are a number of market forces at play that are putting upward pressure on prices, the biggest among them being rental supply. The current occupancy rate for Boston apartments sits at an all time high of 99.49%. The availability percentage of 4.60% is nearly 27.6% lower than its pre-pandemic level of 6.35% in March of 2019.
Another factor contributing to the latest price surge is inflation. The cost of maintaining a property has increased considerably over the past 12 months, with the cost of labor and materials all on the rise. With interest rates rising in 2022, it may offset some of the inflation burdens for landlords, but the added cost of financing will also trickle down to renters.
Inflation and interest rates are two market forces beyond the control of city officials and policy-makers, but the shortage of housing is certainly within their sphere of influence. The only chance the city has to put rent prices in check is to drastically increase the number of affordable housing units in the city. Many development projects were stalled or slowed down during the pandemic which put the city even further behind their goals of adding more rental units to its housing inventory.
Mayor Wu’s rent control task force could put even more pressure on the city’s thin rental supply if they decide to go through with rent control. This will deter more developers and investors from creating more housing units and make it nearly impossible for Boston’s residents to find apartments. Until the city addresses the apartment shortage, there appears to be no relief in site for renters in Boston.