After 18 months of rental supply glut, the Cambridge rental market appears like its back on track. After surpassing Brookline in 2019 as Boston’s most expensive suburb to rent an apartment, rent prices tumbled during the pandemic on account of a surge in apartment vacancies and a drop in occupancy. Now the most recent rental data for Cambridge MA shows that the year-over-year change in Cambridge’s average rent price is back in positive figures, and in March it currently sits at +1.53% compared to 12 months ago.
The average rent price for Cambridge apartments was down year-over-year by -6.58% in May of last year. This was a result of a huge +534.88% year-over-year increase in vacancies that was recorded in March of 2021 in Cambridge. Since remote learning was nixed in March of last year, the market rebounded drastically and absorbed much of the vacant inventory in the months that followed.
Now, the current vacancy rate of 0.95% is closing in on the all-time low of 0.86% recorded in March of 2020, which has reignited landlord confidence. Now the current average rent price of $2,796 in Cambridge marks a 1.53% increase from a year ago. With 5 months to go until vacancies hit their cyclical low point, it looks like apartment occupancy will break records in 2022, which will inevitably push rent prices even higher.
The current average rent price of $2,796 is still $147 short of its all-time high of $2,943 recorded in May of 2020. However, at the current rate of price growth, that figure will likely be surpassed before September of this year. The current availability rate of 2.22% is nearly a full percentage point lower than its pre-pandemic level in March of 2019 (3.21%) indicating the market is stronger than it’s ever been. So look for rent prices to continue to rise in Boston’s most expensive suburb.
Certainly, rent control also provided possible advantages for tenants. For instance, rent control offers insurance against rent enhancement, likely restricting banishment. Economical housing advocates disagree that these insurance advantages are precious to tenants. For example, if permanent tenants have developed neighborhood-particular capital, for example, a series of friends and family, nearness to a job, or children registered in local schools, then tenants confront huge risks from rent acknowledgment. However, individuals who have little link to any particular area can actually secure themselves against local rental price recognition by moving to an economic location. Those financed in the local community are not able to utilize this kind of “self-insurance” as smoothly because they must capitulate some or all of their neighborhood’s particular capital. Rent control can offer these tenants this kind of insurance.
Rent control seeks to assist inexpensiveness in the temporary basis for the present tenants, but in the prolonged span, it decreases reasonableness, fuels improvement, and built up negative consequences on the surrounding neighborhood. These outcomes pinpoint that compelling the landlords to offer insurance to tenants against rent enhancement can finally be inexpedient. If society needs to give social insurance against rent enhancement, it may be less capable of distorting to provide this allowance in the form of a government allowance or tax credit. This would keep away the landlords’ incentives to lessen the housing supply and could offer households with the insurance they passion. A point of a future investigation would be to plan an ideal social insurance program to secure renters against large rent enhancement.
