Virus may dent rental market
‘We’ll start to see vacancies’ if colleges stay shuttered, real estate experts warn
Boston-area rents, already beginning to soften slightly, likely will drop more as the coronavirus crisis wears on, experts say — especially as September approaches with likely far fewer college students looking to live in the city.
“We’ll start to see vacancies, first appearing on that higher end, and then it eventually will hit the middle of the market,” Skylar Olsen, senior principal economist at the nationwide rental website Zillow, told the Herald. “And there’s extra reason to believe that rents will go soft in college towns like Boston.”
Colleges continue to grapple with the decision of whether to bring in-person classes back for the fall semester — and even if some do, experts have said, enrollment is likely to drop, meaning fewer students would be around.
“If we know in June that come September a huge percent of the population that rolls up into Boston won’t be, that’s when you will really see an impact,” Olsen said.
Thanks to the many big colleges’ effect on the rental market, many leases in Boston and the surrounding areas — even for nonstudents — are on September to August schedules.
“The effect will be more dramatic” because of that, Olsen predicted.
Olsen said that 4% fewer renters actually are paying rent as the coronavirus batters the economy and puts record numbers of people out of jobs.
State and local rules temporarily forbid evictions, but there’s no moratorium on rent collection.
“Landlords either have an incentive to lower rent to get something or lower rent to get new people,” Olsen said.
Demetrios Salpoglou of the busy local leasing platform Boston Pads wrote in a recent post that “Many landlords mentioned that they were asking for rents at the same price or perhaps even at a slight discount to encourage tenants to stay.” Others are holding off on listing their apartments because of difficulties showing them during these days of the pandemic, or because “they believe pricing may be better in late May or June.”
“This time compression will make it more difficult to rent out all available units by September, and prices will fall as a result,” Salpoglou wrote, adding that if Gov. Charlie Baker keeps much of the economy closed, this will make these drops steeper.
Salpoglou said that a market analysis of the area shows that there are far more available apartments than normal.
Sarah Maguire, who works in real estate in Boston, noted that most college kids who live in apartments would have had to either sign or resign leases months ago, as is common practice in Boston’s neighborhoods near the universities. No matter what happens, there’s likely to be far fewer students looking to live here come September — which means people are going to be trying to break their leases.
“I’m very interested to see what happens come September if these college and universities don’t come back,” she said.
She said in the short term in general, this likely will flatten some of the big jumps in rent that the area has seen in previous years, but the larger effects of this will likely be in the longer term
“One reason why people live near the city is it’s where they work, and I think we’ve all realized that maybe we don’t need to work in the office anymore,” Maguire said. “I think you might start to see people living farther out, and I don’t think we’re going to see the true true effect of this until six, 12, 18 months from this.”