I know you’ve heard this one before: Boston is one of the most expensive places to live in the country. But have you ever wondered why Boston rent prices are on par with the likes of New York City and San Francisco? It’s a classic case of supply and demand, but it’s happening at a pace that’s increasingly detrimental to current and prospective Boston residents.
A new study out of New York University’s Furman Center found that of the 11 largest metropolitan areas in the country, Boston being one of them, the amount of rental unit growth failed to keep up with rising populations with the sole exception being Atlanta.
Based on census data compiled between 2006 and 2013, the report indicates Boston’s renter population between that time frame jumped by 22.6 percent while the rental housing vacancy rate rose just 15 percent. If it’s any consolation, though, the latter is still greater than or equal to all other metro areas except for Atlanta, Miami and Washington D.C.
In 2006, the rental vacancy rate in Boston was at 5.5 percent. In 2013 it stumbled to 3.5 percent, thereby matching New York City’s.
According to the latest census estimates for 2014, Boston’s overall population rose from nearly 618,000 in 2010 to almost 654,000 in 2014.
That’s constitutes a swelling of approximately 38,000 people over a four year span. Mayor Marty Walsh is currently one quarter into his Boston 2030 housing plan that calls for the development of 50,000 new housing units over the next 15 years.
And, as if to add a little insult to injury, a recent study from the National Low Income Housing Coalition found that someone looking to rent a 2-bedroom apartment in Massachusetts has to earn on average $24.64 per hour to afford it. That equates to over $50,000 per year which many of Greater Boston’s wide-eyed graduates, bootstrapped entrepreneurs and entry-level young professionals – all of whom represent about a third of Boston’s population – can’t necessarily afford.
The study states that in situations where population growth exceeds rental unit vacancy, a semblance of two occurrences will take place:
Either some portion of the new renters move into previously existing units that had been vacant, reducing the rental vacancy rate (the percentage of conventional rental units that are vacant and for rent) and making it more difficult to find an available apartment, or renters form larger households, with the costs of housing being split across more residents.
Given that Boston’s rental market continues to be less accommodating, which Mayor Walsh hopes to stymie with Boston 2030, and the rate of luxury home buying is steadily decreasing, this could signify a resurgence of homeownership over renting.
The availability of homeownership units has also decreased over the years, but it’s slowed down considerably. Census data shows further that the number of Boston home units between 2009 and 2010 fizzled from 88,468 to 85,893. But from 2010 to 2013 that number became 85,138.
Mayor Walsh’s housing plan not only calls for the creation of more rental units, but also outlines strategies for how to implement them without disrupting established neighborhood dynamics the ramifications of which can be the negative results of gentrification.
For middle-income earners 17 total areas have been identified by the Boston Redevelopment Authority for dense, transit-oriented housing.
It also calls for the creation of 20,000 new affordable units (which are based on household incomes less than $50,000 per year, market rate units and other applicable criteria).
Mayor Walsh has said that developers are now pitching housing plans that fall in line with Boston 2030 as opposed to more luxury units that have traditionally afforded them the best return on their investments. This of course bodes well for renters.
But it’s still not fast enough. The city is generally on pace to meet its Boston 2030 goals but if population growth continues at a breakneck speed, it might not be enough when in 15 years we look back in retrospect.
