It’s a renter’s market in Boston
Prices plummet, fees disappear during pandemic
“IT’S A RENTER’S MARKET” hasn’t been uttered in the Greater Boston area for over a decade, but now it’s being heard over and over again as landlords cut their prices to attract tenants in a market transformed by the coronavirus.
Here’s a glimpse of the deals being offered. A two-bedroom in Allston for $1,900 with no security deposit or broker fee. A brand-new Mission Hill studio apartment for $1,500, 20 percent less than it was renting for pre-pandemic, with no fees. A studio in Brighton for $1,250. A posh one-bedroom with a roof deck on Beacon Hill, usually in the realm of $2,600, is available for $1,900, with heat included.
Kristie Aussubel, the owner of Presidential Properties, which rents apartments on Beacon Hill and in the Back Bay, said she has a three-bedroom apartment on Beacon Hill available for $1,000 below its original asking price of $3,500. “That used to be the market price of a one-bedroom,” she said.
Tenants used to pay upfront the first month’s rent, the last month’s rent, a security deposit, and a broker’s fee. Now many landlords are not requiring the first and last month’s rent upfront and some are giving tenants one month rent-free. Many landlords are also picking up the cost of the broker’s fee.
For Sam Resnick at Town Property Group, units that would typically “fly off the shelf” in Kenmore Square and Brighton Landing with all the fees now come with no security deposit or broker fee. One of his landlords is offering two months free, and is paying $3,000 to the broker to get the apartment rented —$2,000 for the fee and a $1,000 incentive.
The biggest units are seeing the largest price reductions. “I saw a five-bedroom in Brighton that was listed at just under $5,000 go for about $3,000,” said John Puma, chief operations officer at Places for Less, a Boston-based apartment listing site and real estate agency, which has over 3,300 listings.
Typically, half of his clients are students and the other half are young professionals. Now he’s seeing a third group emerge – families taking advantage of price drops in neighborhoods they’ve wanted to rent in.
August is usually the time when young professionals and college students are scrambling to find last-minute apartments, often choosing low-quality, bottom-of-the-barrel options. But brokers who normally sign September 1 leases in June are now finding themselves with hundreds of open units —some listed since March.
The reason for this sudden shift in the market is the coronavirus. A state of emergency was declared in March – the time most tenants would have given notice if they intended to renew their leases – and nothing has been the same since.
Brokers and landlords say some young professionals decided not to renew their leases and moved back to childhood homes with the newfound ability to work remotely and save cash. Others decided to move to the suburbs for more space as they anticipate spending more time at home.
The annual student invasion has also lost steam. Colleges shut down and students broke leases, and now there’s little hope of getting them back with universities reopening with remote or hybrid options only. Students from abroad, who typically have a large presence in Massachusetts, are barred from moving to the US.
Property managers are providing flexibility on employment and credit scores, and are even foregoing cosigners for students. Puma said one recent client rented a unit to an international graduate student at Northeastern without a cosigner. “It’s really unheard of,” he said. “It’s a tenant’s market. It will continue to be for at least a year.”
Job status rules are also being changed to widen the pool of prospective renters. “There are a lot of people looking who are currently unemployed, and some landlords are deciding to accept their unemployment income,” said Puma. Some landlords are being compassionate, he said, but some also know they have to do whatever it takes to rent a unit this late in the game.
Other landlords are sweetening the deal with unusual perks. Puma said one landlord is offering tenants flat screen televisions if they move into one-bedroom units on September 1. Others are giving agents $500 Amazon gift cards as a reward for closing a deal.
Although it’s hard to pinpoint exactly how many units are on the market in Boston, Resnick said he’s heard that the figure is around 5,300 for “prime locations” in the Boston area. That count doesn’t include Dorchester, Roxbury, or Hyde Park. The scramble to get tenants, he said, is something he hasn’t seen since “the early ‘90s, or maybe the last recession.”
Boston, considered one of the most expensive rental markets in the country, has seen a 6 percent decrease in one-bedroom unit prices since last year, a drop that hasn’t been seen since December 2016, according to a recent report by online rental platform Zumper.
The number of available unit listings for one-bedrooms was double the amount in July 2020 over July 2019, Zumper said.
“In the short-term, some relief has come to Boston renters as prices are on a downward trajectory,” said Crystal Chen, an analyst at Zumper. “It’s hard to predict what’s exactly going to happen but until a vaccine is readily available, prices in Boston will most likely continue to be down from last year.”
Nationally, the pandemic has caused historically expensive cities to become cheaper, and historically cheaper cities to become more expensive, according to Zumper’s data.
This is apparent in the Gateway Cities of Brockton and Lawrence, where the median rent for one-bedroom units has increased 15 percent during the pandemic.
Puma said the return of students could cause the market to shift back more in advantage of landlords, but it’s unclear whether that will happen in the winter or next spring, He said it’s possible Boston could see a September 1 crunch delayed by six months.
“That’s something that has never happened in Boston,” he said.
There are also concerns over whether landlords will try to make up for lost revenue during the next round of lease signings next year. “We’re seeing huge price reductions now, but they could do the opposite next year, and that will be an even bigger issue,” Puma said.
In Allston, Resnick said, landlords are concerned about covering the cost of their mortgages, something that is impossible when properties remain vacant. “No one wants to cover vacancy over winter months,” he said.Resnick said landlords need to make their units stand out. “You’re competing with so much inventory. Cutting the broker fee isn’t going to make you stand out. Cutting rent or giving a month free will make you stand out,” he said,
One landlord is offering a Brighton Landing two-bedroom condo, with heat and parking and access to a pool included, for $1,900. They docked the price to $1,800 a week later, Resnick said, but the apartment still didn’t move. “I told her to drop to $1,650,” he said.