Boston’s apartment vacancy rate has slid to a new low: 0.47 percent, according to a new report by local listings portal BostonPads.
“We have 73 percent fewer available apartments than we had one year ago today,” said company CEO Demetrios Salpoglou. “If I told someone this a year ago, they wouldn’t have believed me. ‘Mr. Salpoglou, you’re not feeling well,’ they’d say. ‘You’d better go rehydrate.’”
The vacancy rate record, as far as BostonPads’ database goes, was set at 0.42 percent in late August 2019.
Because the largest share of Boston leases turn over every Sept. 1, Salpoglou said, the market is poised to come under even greater pressure.
Average rent in the city is $2,695 across all types of apartments, according to BostonPads, a 6.87 percent increase over the end of June 2021.
The average rent for a studio is $1,857, while the one-bedroom average is $2,187 and the two-bedroom average is $2,694. Among studios, one-, two, three-, four- and five-bedroom units, only one-bedrooms have not yet broken previous record highs.
The city’s apartment market is feeling the effects of two years of disruptions to the construction pipeline, Salpoglou said.
“The pandemic threw everything off the rails,” he said. “We’ve had two years of essentially not being able to build – the root cause of it is we’re not building enough to satiate supply.”
Supply chain disruptions during the pandemic have delayed a range of new buildings, Salpoglou, and now skyrocketing diesel fuel price and other inputs s are killing some projects.
“Now I’m hearing landlords say they can’t make deals pencil and they’re going to be walking away from projects,” he said. “You’re not moving lumber in a [Toyota] Prius. You need big trucks to move big things and the cost of energy is out of control.”
It comes as real estate agents report a significant contingent of homebuyers who had hoped to purchase starter homes this spring have become priced out of the purchase market or discouraged by rising interest rates.
“I think we have to look at innovative ways to add housing. Let basements be converted. We need to be building quick supply” that can come online faster than the two or more years it takes to permit, finance and build an apartment building, Salpoglou said.
