Low supply, high prices weighing on the market

Boston-area real estate experts are warning renters ahead of the season to prepare for some of the toughest and most competitive market conditions the city has ever seen.

“Wherever you look, there’s almost no availability and the prices really are as high as they’ve ever been,” said Doug Quattrochi, CEO of Mass. Landlords. “That looks really bad for a tenant.”

Julia, a recent college graduate looking to return to the Boston area, witnessed this. “It’s a bit difficult there,” she said.

For more than a month, Julia scoured rental websites like Apartments.com, Craigslist and Facebook for a three-bedroom apartment and struggled to find something that met her needs and those of her roommates.

So far, out of the handful of places she’s visited, all have been either “gross” or far from where they want to be. The band started increasing their budget to find something they liked.

“You absolutely have to have time off so you can look at things and see them as fast as you can, and be really on top of it, otherwise I don’t think it’s going to go very well,” she said. noted.

Demetrios Salpoglou, CEO of rental site Boston Pads, said a year ago more than 7,000 apartments were available for rent in Boston, the most on record. Today, only around 2,600 apartments are available. “The market is incredibly tight,” he said.

Several factors are severely limiting supply, he said. For one thing, many tenants have recently moved into new apartments after the first big wave of the pandemic ended.

“I called it ‘tenant fatigue’, didn’t I? If you just moved into an apartment, you probably won’t want to move next year,” he said.

Additionally, with 2020’s high vacancy rates, many homeowners have taken the time to renovate their homes, facing high labor and material costs in the process. Now that the units are upgraded, landlords are raising rents to try to recoup some of the costs for a nicer unit.

Although Quattrochi added that the availability of rental assistance in the age of the pandemic could also reduce the availability of units, the real problem, he said, is the single-family zoning that is prevalent throughout the city. Boston area.

“There just isn’t enough housing in Massachusetts. It’s been that way for about 110 years,” he said.

A limited supply is also driving prices up to 2019 levels – already record highs – or even higher. Salpoglou said average rents in Boston are around $1,750 for a studio, $2,000 for a one-bedroom, $2,500 for a two-bedroom, $3,100 for a three-bedroom and $3,800. for a four bedroom.

Many tenants, especially those in buildings owned by large rental companies, have been able to score luxury apartments with steep price cuts and deals in the pandemic era of 2020, and many landlords have absorbed the broker fees.

Now that COVID has subsided in Massachusetts, “these big business owners will give a 15% rent increase or something ridiculous just because they know the cost of change is so high,” Quattrochi said. .

Landlords now have the upper hand, and most are no longer willing to make concessions like paying brokerage fees, usually equal to one month’s rent. Salpoglou said that during the pandemic, up to 90% of owners have paid full brokerage fees. Now only about 8% do, so it’s more for potential tenants.

These poor conditions are also pushing tenants to start looking for apartments earlier and earlier, said Ranjita Singh-Ortiz, owner of Cambridge Premier Realty and working in Cambridge, Somerville and Medford.

“February was so slow but it’s been really busy, March has already picked up and it’s going really fast,” she said. “It’s going to be a pretty hectic season.

She said a cheap apartment rarely stays available for more than five or six days.

Singh said she has seen increased demand for apartments that have a suburban feel, with amenities like outdoor spaces, but are still central to in-demand areas of Cambridge and Somerville.

Given the limited supply, however, “don’t look for that perfect spot,” she said, advising renters to forego amenities such as outdoor space and parking if location is important.

“If it fits your priorities, go for it,” she said. “Because if your budget is limited and your list is too long, it will be impossible to find this place.”

She also advised tenants to start looking for apartments early to beat competition from the majority of tenants, including the area’s large student population. June renters, for example, should start looking in March instead of April or May.

“It’s going to be a bit difficult for clients given that they’ll have to be on top of their game, we’ll have to pay broker fees, we’ll have to deal with rising rents,” she said. “But if we plan accordingly and are proactive about things, we can manage the season.”

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