The JumpShell team likes to live in the past, present and future of apartment renting so we can better understand and create an ideal peer-to-peer apartment renting environment in the Hub. We’ve been following and analyzing a lot of current trends in the market, so we thought we’d change gears and write up a forward-looking post on what JumpShell predicts Boston’s apartment renting scene will look like in 2014, based on historical rent/development growth.
Here’s what our research found, in a series of chronological, digestible bullet points:
- 2011: Rents ballooned a staggering 8.4% in 2011. The lingering effects of the recession continued to stifle homeownership and apartment rentals became the go-to housing choice for thousands of people who would otherwise be looking to buy. The demand shock caused prices to spike.
- 2012: The year-end occupancy rate in 2012 was 96.6%, down a hair from 2011 as demand for about 2,800 units in the calendar year came in just under the completion volume of roughly 3,600 units.
- 2013: 2013’s scheduled apartment unit completions are set to repeat 2012’s total of 3,600 units added. On a related note, Mayor Menino recently announced his “Housing Boston 2020” initiative, setting the goal of building 30,000 new apartments in Boston over the next 7 years. We imagine this is a policy reaction to research that predicts 48% of net new households (or about 57,000 people) will opt for housing in multi-unit condominiums or apartment complexes through 2020. Without significant increases in housing supply, this would mean another spike in rents. Although the initiative is well-intentioned, it may take some time for building permit applications to be reviewed and approved, which may delay the start of projects and push back the timeline. We predict the occupancy rate will tick up another tenth or two as demand continues to outpace supply.
- 2014: Boston will absolutely continue to be one of the most vibrant apartment rental markets in the United States. Considering steadily increasing apartment demand and Menino’s initiative to meet that demand with additional supply, JumpShell predicts that 2014 will start with a 96.9% occupancy rate and will see a 3.4% increase in effective rent from 2012, bringing the average to $1,790* per month across the city.
*This figure was calculated based on JumpShell’s rent growth prediction for 2013 (3.4%), applied our estimate of Boston’s average effective rent in 2012 ($1,731).
There are a lot of external factors that affect how Boston’s apartment rental market changes, but considering all the research we’ve seen, barring any kind of economic crisis or groundbreaking housing policy change, the Hub’s market should continue to grow aggressively, but in line with other major apartment markets in the United States.
Got questions about apartments in Boston? Ask the experts at JumpShell: [email protected]!
Sources used for this article:
- Property Management Insider, Boston Rent Growth Moderates
- The Kitty and Michael Dukakis Center for Urban and Regional Policy (Northeastern University), The Greater Boston Housing Report Card 2012
- Reis Reports, Jobs and Looser Housing Regulation in Boston Lead to Steady Growth