We’re less than 2 months into 2022, and the apartment rental market in Boston has yet to come out of hibernation. Historically, Boston’s rental market cycle begins to kickstart in the first few weeks of January as students return for the second semester. We typically see apartment availability start the year between 2-3%, and it usually doubles in the first two months of the year.
That is not the case so far in 2022. We began the year with record low apartment availability at 1.67%. Since then, availability of Boston apartments has increased to 2.81% in the city, which is still well below its pre-COVID level in February of 2020 (4.03%). Even vacancies are down by similar margins. The current vacancy rate of 0.63% is half that of its February 2020 level (1.28%).
The all-time low supply of apartments in Boston is a drastic contrast to the record-high apartment availability we saw during the pandemic. Boston’s real-time availability rate (RTAR) hit an unprecedented 13% less than a year ago at the height of the pandemic. This supply glut was mainly due to remote learning and remote work policies being adopted by local Universities and organizations.
Now that these policies have been eased, especially by local Universities, we’ve seen a market correction of epic proportions. Now, landlords are reporting record high numbers of tenants re-signing leases for the upcoming year, as many renters fear being faced with low availability and high prices this year. Prices stayed relatively flat during COVID amidst the supply issues, and many feel that prices are going to rise significantly this year.
Boston’s apartment availability rate typically peaks during the spring months towards the end of the second semester. Excluding the pandemic year, this number typically hits a high of between 6-8% historically, with 2020 marking the lowest peak availability rate on record at 5.68%. This year, it looks quite possible that the availability rate will not surpass 5%, which will present many challenges for renters.
We’re already seeing the effect this tight supply is having on prices in 2022. Since December, prices for larger apartments have accelerated rapidly and are close to surpassing their all-time highs set before COVID. Prices will certainly surpass those levels this year if rental supply figures remain low, which they likely will if many renters decide to stay put this year.
We can only hope this will motivate those in city hall to work harder to provide more affordable housing options in Boston for the future. Many development projects were stalled and put on hold during COVID, which could be a contributing factor to the low supply numbers we’re currently seeing. Until Boston addresses the affordable housing shortage, renters will have to carry the burden of rising rent prices along with inflationary pressures.