Boston Rental Market Becomes Increasingly CompetitiveJuly 16, 2011
The age old real estate question that keeps getting re-visited – is it more beneficial to buy or rent? This question is especially relevant in the current Boston luxury real estate market where uncertainty is higher than average, but investment potential is greater.
The Boston rental market has gone wild recently, and the reason is two-fold. There is a shortage of Boston luxury real estate inventory. Sellers are hesitant to put their house on the market during a ‘buyer’s market’ era, since the risk is greater for length of time on the market and offer prices are more negotiable.
Secondly, due to high demands from industries in Boston such as Biotech firms, medical centers and top-ranked universities, not to mention financial institutions, the local professionals are discerning consumers that are willing to pay whatever the asking price to buy the property that meets their needs. Since there isn’t an abundance of Boston luxury condos to choose from, potential buyers are settling for very high rentals, in excess of $30K a month at times. These potential buyers are waiting for their dream home and opt to rent in the meantime, despite the fact that Forbes ranks Boston No. 4 worst place in the US to rent.
If you do the calculation, it really doesn’t make good financial sense to throw money at high priced rentals for a year or two, waiting for your dream home to come on the market. Given the history of Boston luxury real estate, it is more economically viable to purchase property, even if not your ideal home, and consider it a rental until you find a Boston luxury condo that meets your wish-list criteria. Then you can sell the temporary property and recoup your mortgage payments, essentially living rent free for a couple of years.
Do you prefer to rent or have you purchased a home?