No End in Sight to Boston's High Real Estate Prices
In August 2017, Boston was the fifth most expensive city in which to rent a one-bedroom apartment, and the sixth most expensive place to rent a two-bedroom apartment. In August, it cost about $2,200 per month to rent a one-bedroom apartment in Boston. That makes Boston slightly less expensive than Washington, D.C., where a one-bedroom apartment costs around $2,280 per month. It's about $2,350 for a one-bedroom in San Jose, California and $2,850 for a one-bedroom in New York City. San Francisco takes the cake with an apartment rental price of $3,390. The median price for a two-bedroom apartment in Boston in August 2017 was $2,600. San Francisco is the most expensive for a two-bedroom, with average rental rates over $4,500 per month. With average monthly rates around $3,200 for a two-bedroom apartment, it's more expensive to rent a two-bedroom in Washington, D.C. than New York City. Two-bedroom rental prices in New York City mirror that of Los Angeles, California; both average $3,200 per month, while Boston's rates of $2,600 per month are lower. Despite Boston's relatively high cost of rental living, rental prices dropped slightly in 2017 (just under 2 percent compared to 2016). The only other city in the top ten for expensive rentals was Honolulu, Hawaii. In Honolulu, it costs about $1,740 per month for a one-bedroom apartment and $2,280 per month for a two-bedroom apartment in Honolulu. Although rental prices are high in Boston, investors consider it one city with fairly priced rental units.
As with other cities, rental prices for Boston are not cut and dry. Many factors play into apartment pricing, but one of the most significant factors is an apartment's location in the city. In Boston, the downtown area, South Boston, Back Bay and Beacon Hill, which are two of the most historic neighborhoods within the city, had some of the highest apartment rental prices. In those areas, average rental prices can exceed $3,000, which translates to an average cost of over $3 per SF. In comparison, the least expensive suburbs in which to rent an apartment are Hyde Park, West Roxbury, and Mattapan. The growing population's continued expansion is leading to housing scarcity across the city. As of 2017, only two percent of Boston's apartments were not occupied, which is a record low.
Proximity to Boston's public transportation also influences rental prices. It can cost several hundred dollars per month more to live in a location that is close to the T, for instance, than in a place that is further away, even if it's just a difference in distance of a few train stops. Another reason that Boston's living prices are so high is because of property taxes. Although rental rates have decreased slightly, property taxes across the city have continued to rise. In 2015, for instance, property taxes on Boston's triple decker buildings rose by about 11 percent. Landlords and building owners face an ongoing struggle, as they will eventually deter prospective tenants if rental rates become too high. However, landlords and owners must still generate enough money to cover the cost of maintaining their buildings. Many owners also rely on apartment rents as supplemental income.
While rental prices have fallen slightly in Boston recently, the price of median home sales has increased. Since 2016, the market has seen a four percent increase (about $20,000) in average home sales. The average price per SF rose about $620 during that time too, which is up from the previous average of $590 per SF. The largest change since 2016 has been in one-bedroom homes, which increased in average sale price by about 11.5 percent since 2016. Median sale prices increased just over four percent for four-bedroom homes, and by around 1.3 percent for a two-bedroom home. Three-bedroom average sale prices dropped since 2016 by just under two percent.