$2,860 2Q 2024
2.7%
96.0% 2Q 2024
-10 BASIS POINTS
2,191 [YTD: 3,917]
1,923 [YTD: 3,662]
The supply-demand dynamic has shifted, with renters absorbing 2,191 units in the second quarter, which surpassed the 1,929 units completed over the same period.
Boston’s rental market continues to display robust second quarter performance. Average rents surged 2.7% year-over-year to $2,860, outpacing the national average and securing Boston’s ninth spot among major U.S. cities for annual rent growth.
Investor activity in Boston’s multifamily market remained robust in the first half of 2024. Investment volume surpassed $1.2 billion, aligning with pre-pandemic levels. Additionally, the number of properties traded increased from 38 to 49 compared to the previous year.
QUARTERLY DEMAND
QUARTERLY COMPLETIONS
Boston’s multifamily market experienced a surge in demand during the second quarter of 2024, as net absorption totaled 2,191 units. This significantly outpaced new supply during the same period, which totaled 1,923 units. The submarkets of South Plymouth County and Quincy/Milton/Randolph emerged as key drivers of the overall absorption rate, with each accounting for over 200 net new leases.
Through the first two quarters of 2024, Boston’s apartment inventory has expanded by 3,662. This new supply was concentrated in 10 of Boston’s 33 submarkets, with East Boston/Chelsea and Everett/Malden/Medford/Melrose adding 500 and 450 units, respectively. The level of units under construction remains elevated as developers are working on over 17,000 units.
Boston’s apartment market has shown resilience, with occupancy in stabilized assets remaining above 95%. Despite a slight annual decline of 10 basis points, the overall occupancy rate is a robust 96.0%, bolstered by a quarter-over-quarter improvement of 30 basis points. Performance varied across submarkets: Quincy/Milton/Randolph saw a notable 2.3% annual increase in occupancy, while pricier areas like Somerville/Charlestown experienced a 2.2% decline. Overall, the market maintained a healthy balance, with most submarkets exceeding their long-term average occupancy rate.
In the second quarter of 2024, Boston’s multifamily market experienced a healthy 2.7% year-over-year increase in average effective rents for new leases, reaching $2,860 per month. This growth easily surpassed the national average of 1.0%, while placing Boston among the nation’s top 10 performing large multifamily markets. Projections indicate rent growth accelerating towards 4.0% by the end of the year, driven by stable occupancy rates and strengthening demand. In the 93 North area, rents averaged $2,730, with a 5.5% increase, marking the strongest rent growth within the Boston metro. Apart from Roxbury/Dorchester (-0.1%) and South Boston/Seaport (-0.6%), all other Boston submarkets experienced positive year-over-year rent growth, with 16 of the 32 submarkets recording above-average increases.
Average Monthly Mortgage Payment
Average Monthly Rent
Multifamily investment activity has displayed resilience despite a challenging investment environment in the U.S. Although overall sales volume declined by 27% year-over-year in the first half of 2024, activity remained consistent with pre-pandemic levels. The number of transactions rose to 49 from the previous year’s 38, and there was a notable uptick in institutional investor activity. Typically, these investors have constituted around 30% of the buyer pool over the past decade, but their share has increased to over 46% so far this year. Overall, Boston’s multifamily investment market remains active despite the challenging interest rate environment, demonstrating investor confidence in the market’s long-term prospects.
*Most Active Buyers and Sellers are based on the sale volume of apartment units.
* Trailing 4Q average PPU
* Preliminary Data from RCA – Individual transaction $2.5M +
|
Under 35 Years
|
35 to 44 Years
|
45 to 54 Years
|
55 to 64 Years
|
65 to 74 Years
|
75 to 84 Years
|
85 Years & over
|
|---|---|---|---|---|---|---|
|
1.0%
|
-0.1%
|
-1.0%
|
0.0%
|
0.4%
|
-0.4%
|
0.0%
|
The Boston metro area is seeing a significant increase in young renters. The under-35 age group has emerged as the fastest-growing renter demographic, expanding by 1.0% from 2019 to 2022. This trend indicates a growing demand for rental housing near lifestyle amenities, entertainment venues, and employment hubs.
Boston’s apartment market has demonstrated remarkable resilience, outperforming many coastal markets despite economic challenges. Strong absorption rates and stable occupancies contribute to the market’s health, underscoring Boston’s appeal to residents and businesses alike. The city’s knowledge-based economy, fueled by a highly educated workforce, continues to attract talent and investment.
While high living costs and long commutes present challenges, the overall quality of life and economic opportunities in Boston outweigh these factors for many. Looking ahead, Boston’s strong economic fundamentals position the city for continued success. The presence of vital industries, a skilled workforce, and a desirable lifestyle create a solid foundation for the apartment market’s future growth.
