wrote about this topic about a year ago, and thought the subject matter needed to be revisited. In 2007 the Buying market was going downhill fast and the rental market was booming. Agents would go on showings during the peak season and off season and they would walk away with more than one application. If you were a landlord during that time period you could command higher rents, and not really fear if the unit wouldn’t get rented. In 2014 we started to feel a slight rental shift happening, but the rental shift really was felt in 2015 when renters were starting to notice there was a lot of inventory on the market and started to ask the question why am I paying so much to live here when I could be buying?
Interest rates like now were low, and the economy was showing steady signs of improvement. If you were a renter you had plenty of options from private landlords, management companies, high rises, but many of the people who would normally rent these properties were starting to think I could buy a home or I could stay where I am till I find a place to live that really interests me. Renters unlike 5 or 6 years ago have a lot of options to choose from throughout the city of Boston, Cambridge and even outside those areas and guess what they know they have options. Also, another factor that has changed the real estate landscape in the city of Boston and Cambridge has approved many rental buildings that have been built which have oversaturated our market. Right now we have more rental buildings being built then condo buildings partly due to the fact that it’s easier for a developer to obtain financing if they build a building that is all rentals vs condo’s which have lead to the slight problem it’s driving down rents across the board. If you’re a renter you’re saying finally rents are coming down, but if your that private landlord or investor you might be going oh no. If you are thinking about getting into the landlord business or currently have been now might be a great time to sell vs rent if you own a property in Metro Boston or Cambridge. Here are some stats to consider
1 bedroom 500-600 SQ feet in Back Bay for rent there are 31 listings on the market out of those 31 listings 13 listings have been on the market for more than 3 months. Many of these listings on mark are priced in the range of 2000-2600. If you’re wondering how many of these properties were listed for Sept 1st move in the number is high 25 listings are on the market right now for Sept 1st and its currently Sept 8th. If we look at the same profile to buy there is only one listing on the market and it was just listed today for $575,000 at 76 Commonwealth Avenue. If we looked further into what properties have sold for in this range 6 properties out of 11 sold for above asking and were under agreement in less than 10 days and closed under 30 days.
If your thinking well that’s just 1 beds in Back Bay don’t be so quick to judgment on that. If you want a 2 bed 800-1100 square feet in Back Bay you have 4 listings currently on market to buy and to rent you have 22 listings on market and 19 on the market for Sept 1st move in and have been on the market for 3 months or longer. If you look at South End market for a 2 bedroom 800-1100 square feet you have the same amount of listings on market and 6 listing have been on market close to 3 months. If you were thinking about buying a 2 bed in South End you have seven listings to choose from and the cheapest being 499,999 and was listing on Sept 8th. More then half the listings that have sold on MLS have sold for above asking and were off-market under 30 days. If you’re still not convinced selling might be a better option than renting then look at South Boston1 bedroom rental 500-600 there are currently only 4 listings avail for rent ranging from 1600-2600 and 3 out of the four are for Sept 1st. For sale, you only have two options looking for a 1 bed in that range and many that went on market closed in under 30 days.
Two bedrooms for rent you have 31 units currently on the market and out of those units 10 units have been on market 2 months or longer and 19 are on the market for Sept 1st move in for rent If you were thinking about buying a home in South Boston right now you have 14 listings on the market starting at $539,000 and most listings in South Boston for two bedrooms have sold in under 60 days with most selling under 30 but there were some listings that closed in 60 days . Keep in mind the examples given in this blog are just a snapshot of the market, but if I broke down every single neighborhood the trend for a condo to rent vs buy would be the same regardless of square footage. If you would like a detail report for your neighborhood please contact me. If you must rent be smart about it and remember that the renter right now has the upper hand and anything you can throw their way like one-month rent free or even two or offer to pay the broker fee all help, but if you can your better off selling right now then waiting for the unit to rent. Gone are the days for a while where landlords could command the rents they could of the past, and you might feel your home is worth this, but chances are the renter will disagree with you and every month your unit sits on market is a month where the listing gets stale and you the landlord isn’t collecting rent. When 2007 started to see rents go up and landlords getting units rented quickly I always said to an owner just realize what comes up will come down to remain realistic. If you’re a seller who wants to wait here are a few things to think about
China Love affair with the US appears to be weakening and there is talk that the Federal Reserve will increase interest rates. It is an election year and depending who takes over the oval office Trump or Clinton could change the current feeling of the market. If you were thinking about selling in the Suburbs I might say try to rent your home out, but if you own a rental in the city I would say now is a great time to sell and prices will never be where they are now.
Also with less inventory, a seller can command a higher price and in a years time, there might be more inventory on the market which will most likely affect the sale price. Baby boomers, Generation X and Y along with Millennials are all calling cities home, and many of them are raising their kids in the city not running to burbs to raise their children. Millennials also were the last ones to pull the trigger on buying a home and stayed with mom and dad the longest. This generation is one the largest generations and they are entering the market now to buy a home and turning their backs on rentals if they can. The new trend with home buyers is they want to work, live and play in their neighborhood. Unlike prior generations who lived in one place and worked in another. Today’s buyer wants to live, work and play all in the same area, and yes a renter might want that too, but they might not.
If you have had your condo on the market for rent and considering the idea of selling contact me. I know rentals well and happy to put a home on the market for rent and for sale, but if I had to put money on what will happen first I would say it will sell before it rents. If you’re unable to sell price your investment what you are currently getting from the prior tenant or slightly under and offer a bonus to an incoming tenant to sign a lease with you. The Rental Market is a market where you need to have a game plan going in more than ever right now and if you listen to a good agent it will help get your home off the market. if you want more tips and insight on the real estate market then please subscribe to my newsletter and blog