After gaining significant ground on single-family home sales in January, a review of Boston's rent prices in the same month indicate that rental rates in the city were up 4.6 percent from a year ago, this according to data provided by Zillow.
Boston's median rent last month was $2,149, compared to the national median, which was up ?3.3 percent to $1,350. The same study also found that home values in Metro Boston reached an average of $365,000, up 3.2 percent compared to the prior year.
With this continued pace of growth, many in the real estate industry are pointing to a more robust growth in rent compared to home values this year. This is perhaps the compelling reason why investors are prompted even more to purchase property to turn into profit-making machines.
The ongoing uptrend in rental rates have some advocates concerned over rent affordability since current lease averages are pricing more renters away from the city, with a vast majority of Boston neighborhoods experiencing a resurgence in rentals in the past five quarters - with an outlook for an additional two more years before finally leveling off.
Most experts agree that the primary cause for the sudden steep increases in rent could be attributed to only one factor: supply. The "shortage" of quality and affordable rental units in the market is causing more people to either look elsewhere or contend with what's available. And though there are some developments up for delivery in the coming months, most of them are luxury rentals that the middle class cannot afford.
In fact, rental rates have increased twice as fast as wages in the city did in the past decade, leaving little or no room for the middle class man's pocket to catch up with the rising rental tide, and in effect affecting their homeownership plans as more of their discretionary income goes into rent and away from their dream downpayment fund.
Currently, residential rental buildings in Boston are required to have 13 percent of its total number of rental units built with affordability in mind. This however, also has a "loophole", as developers can opt out from the regulation by paying the city $200,000 (per unit designated affordable unit) towards a fund for affordable housing.
The city, on its part and since 2012, placed on fast track plans to replenish the city's inventory with a goal of building 53,000 new units of housing by 2030, with a third of those units branded "affordable". Of this total, 8,000 are being built at the moment, with delivery dates ranging in the next 6-12 months. Officials are hoping this somehow eases the gridlock, and drive the cost of renting down - admirable aspirations that might not see the light of day until 2017 when more developments are expected to be delivered.