Thursday, March 09, 2006

Rents in Hub still lower than in 2001

On Wednesday the Boston Herald published a story titled "Hub rents going up." Let me humbly submit that the title of this post more accurately captures the news value of the story.

The key points:
M/PF Research, which tracks rental markets nationwide, says in a quarterly study due out later this month that average Hub-area rents rose 1.5 percent in 2005 to $1,300 a month. That’s the first annual gain since 2001, when average apartment costs peaked at $1,379 a month.

A measly 1.5% increase (less than the inflation rate) trumps the fact that rents continue to be lower than they were 4 years ago.

More reasons not to worry:
...Hub landlords report little evidence of higher rents.
“We’re seeing a slight increase in overall occupancy, but not much of an increase in rents,” said Chris Reilly of Equity Residential Properties, which owns 9,000 Massachusetts apartments.
Market watchers add that the large number of apartment projects now in the pipeline should keep rents in check in the future. MP/F says 8,337 Hub-area units are currently under construction - more than all of the apartments built in the 1990s.


MA Market Watcher said...

Two reasons for the rent reductions were:
- the layoffs and salary reductions that went with the tech bust of 2000

- many former renters becoming first time buyers as they tried to get a foot on the property ladder

The former is SLOWLY correcting itself. The latter has drastically slowed. So rents should stabilize and inch up.

My guess is a lot of the current condo inventory belongs to investors who bought knowing rents wouldn't cover their monthly costs but decided the capital gain was worth the difference. Decent logic in a rising market but now that it's turned they need to get out quick.

I have no desire to see people get burned* but when a simple budget will tell you that you're going to run an operating loss, you should be extra cautious. But then that would be common sense wouldn't it?

* exception: short term flippers!

AsgardRagnarok said...

I am looking to rent in the Plymouth area in the next few months. I began looking around. I looked at a complex back last summer and they were sold out. I checked back this week and they are offering move in specials, $200 of some units and a free first months rent. Funny how that works. said... integrates how much homes SOLD for in Boston MA as well as nationwide using the google mapping technology. If you don't see data for your area simply email with your zipcode and or address and they'll update the site and email you within a few days.

Hapto said...

But I will say that in Boston, it has gotten *much* harder to find a roommate (pre 2001/2, we had to beat them off with a stick)...

And 'ma market watcher', I would put more emphasis on 9/11, and how that affected the economy... and thusly how it affected whether or not parents were willing/able to subsidize their children's off-campus lives. People have relaxed a bit and stabilized their employment, but this trend, combined with the economic chill... less folks in the roommate pool.

And this is important to Boston, because the housing market is fantastically displaced by the housing market.

My apt rent (5/br, somerville - college house) for the past bunch of years;
2000- sept 99
2225- sept 00
2400- sept 01
2000- sept 02 (with bonus panic)
2000- sept 03 (with more panic)
2120- sept 04
2120- sept 05

Anyway (I wrote this up over the course of the day) I think until the economy gets cocky again, we're going to stay pretty much 'round here, or slightly lower...