The Boston Foundation reports in their annual Greater Boston Housing Report Card that while it is true that new housing is being added in the Greater Boston area, the majority of the units are in the city of Boston itself and in just a few surrounding cities while towns in the suburbs are seeing little to no construction.
Young and working families are finding it difficult to afford to live in the city but since housing prices are increasing in the suburbs because of a lack of new construction these families are left with few options. Only a handful of towns have added noteworthy amounts of housing, including Weymouth, Framingham, Plymouth, and Sharon. Out of about 13,000 building permits that were issued this year for the entire Greater Boston area, about 40% of those were issued by the city of Boston.
Although some believe that housing prices may inhibit economic growth, schools and jobs in the area continue to attract students and professionals every year. Rent prices are also slowly falling as a direct result of the additional housing that has become available.
When you think of more affordable housing, you think of the suburbs; more space, more land, better prices from homes to rentals. However, as millennials begin to wiggle their way into the real estate market, pricing in the suburbs seems to be suffering.
In the last year the cost of renting a home in the suburbs has risen higher than the cost of renting in the city. In a new release by Zillow, median monthly cost of suburban rents rose by 2.5% while urban rents only rose by 2.3%.
This is a stark difference from last year where urban rental prices were up 5% while suburban rental prices were closer to 3%. The cities that are experiencing the fastest increases are Portland, Seattle, and San Francisco. San Francisco experienced an urban rental price drop of 0.4% and a 2.6% increase in suburban rental price.
The more prominent examples of this trend reside in cities where rent affordability is a main issue. Renters who are paying more than 44% of their income in rent, like San Francisco, are the driving force here.
As rent continues to rise in cities, renters will either have to make due or forfeit their apartments for cheaper options elsewhere. Choosing a longer commute for a drop in rent prices seems to be the main solution.
While these statistics only define renting, home ownership plays a huge part in it. Most millennials would like to buy a home but lack the assets, especially the down payment, to realistically make the jump. With rent prices on the rise, and the inability to buy homes, there is no reason to not expect this trend to continue into 2018.
Will we see a mass exodus of city renters transitioning to suburbs? What effect will this have on the pricing of rentals and homes? Only time will tell.