Anthony Discusses Rental Market in Boston
Good news for renters while other parts of the country are seeing a huge spike in rent a change in the market in Boston is positive news for your wallet. Real estate expert Anthony Lamacchia of Lamacchia Realty here to explain that impacted the rental market but now things are sort of switching gears so why are we seeing lower rents now?
Let me put it this way I don’t think we’re quite seeing lower rent prices yet but we’re not seeing them go up and up like they were in 2011 and 2012 and 2013, this year things have calmed down a little bit there’s actually new luxury apartments available in downtown Boston where they’re now offering a free month’s rent to sign on for a year or two and things like that so it’s classic supply and demand when there was a lack of supply 3 and 4 years ago the rents started going up now there’s additional supply there’s a little bit less demand because young people are looking to buy again rather than rent and that’s why you’re seeing it ease up a little bit.
It’s going to ease up but as of right now you’re not saying that it’s going to see a spike today in rent it’s a trend over time as it went up a few years ago
I think we’re just past the peak of rental prices in the Boston area and it will be interesting to see what happens in the next few years there are other cities out there that haven’t quite hit their peak or who may be peaking now so very interesting to watch.
So ballpark for a one bedroom out there in Boston what’s the ballpark right now?
It might be a couple thousand a month depending on where it is there’s probably places where you could get for a thousand or two thousand it all depends on the location.
You mentioned a lot of these condos being built and there’s conversion of apartments back to condos and people are eligible to buy now who maybe a couple of years ago couldn’t so that’s getting rid of a lot of potential renters.
Right there was a period of time from 2010 to 2012 where people were forced out of homeownership due to affordability or whatever it might have been so there was an influx of people looking to rent well now that’s backing off and that’s why we’re seeing it ease up a little bit so I think is going to happen is there are places in Boston and all over the place where there are excessive amounts—and I do say excessive on purpose—of luxury apartments being built. I think what will happen in the next couple of years hasn’t happened yet but I think it will happen is some of these developers planning on building to rent them will end up selling them.
Now you say excessive you wanted to say that you think it’s too many?
Every time there’s a boom builders either build too many to rent or build too many to sell there’s something like 9000 luxury apartments approved to be built in the Boston area in the next three years I don’t think all those people are going to strictly want to rent because most people are interested in homeownership. Renting is a wonderful short term option
So you think most of these will end up buying rather than renting.
The developers will end up not getting the rents they want and say you know what, let’s convert them to condos and sell them.
So you just mentioned renting is a short term option you’re someone who is thinking do I rent do I buy what do I do, do I have enough for a down payment what’s the best option especially since we’re talking rents are going to stabilize.
Down payments, if you’ve got 3 percent then you can buyI always say to people, what’s your plan? If you’re going to stay in a place more than 2 or 3 years you really ought to consider buying you build up equity, you get a write off with all the interest you pay which at the beginning of a mortgage is a lot of interest so you get the mortgage interest deduction but for short term I don’t recommend it. As an example we have clients from other parts of the country who move here they’ve never lived here and they say should I buy first or should I rent, I tend to tell those people you know what? Rent for a year. Make sure you like the area make sure you confirm where you want to live, do you want to live close to Boston, further from Boston and then buy.
Depending on your situation do a little research talk to someone who’s an expert about it before you make those long term decisions either way.
That’s right and also look at the trends here, from 2002 to 2006 whoever bought even if they sold 6 months later they made money well that isn’t the case right now yes the market’s improving but it’s not improving at a rapid rapid rate so if you buy something today, and you go to sell it in a year it may not be worth more than what you paid in Boston it may be worth more but places like Worcester County or even towns around the 495 belt you buy something today it may not be worth more in a year so you have to keep yourself prepared for that. Whether you’re debating whether you should rent or buy.
All right Anthony Lamacchia good advice we appreciate the update on the market.
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