Cost Of Renting A Home On The Rise
BOSTON (CBS) – It’s a question that frustrates tenants across the state: why are rents so high?
In fact, rents in the Greater Boston area are among the highest in the country.
By one estimate, it takes $1,700 to get a unit in the suburbs and $3,000 in downtown Boston.
“This season has been extraordinary. Rents are super high. I think the vacancy rate is 3-percent right now,” said Tim Schmidt of ReMax Destiny in Cambridge.
That vacancy rate is second only to San Francisco.
Schmidt believes one reason for the high rents is good news. The region’s job market is stronger than most other cities.
“You see a lot of start- ups, a lot of bio-tech,” said Schmidt. “There are people starting jobs in the $70,000-$100,000 range and moving to Boston.”
Although there have been new units added in unconventional areas like adjacent to Fenway Park, inventory cannot meet demand.
Another factor is the number of would be buyers who are nervous about taking the plunge after the real estate market crash.
“I think they would rather wait and see,” said Schmidt.
The result is more renters vying for units.
But now that rents have gotten so high it is causing more people to take a look at the numbers again. They end up realizing it is cheaper to pay a mortgage than it is to rent.
Pablo Rohas said it made sense for him to buy after renting for just three months.
“I realized my mortgage was actually a little less,” said Rohas.
But even though mortgage rates are at historic lows and prices are attractive, it can be tough to qualify for a home loan.
“The problem is the rules have changed and people haven’t adapted to the new rules and it’s going to take several more years to realize what it is going to take to get there,” said Al Bingham, financial author.
If that puts the American Dream on hold, then Tim Schmidt says renters might need to rethink their strategies.
For example, you may no longer have the ability to live along the Red Line in Cambridge.
“You might want to consider things right outside the T in Somerville or other places in Everett or Medford, right on the edge of the T, you might find better deals there,” said Schmidt.