If you are looking to invest in real estate in 2021, one of the markets to watch is Boston city. In fact, according to a report by Urban Land Institute, Boston is ranked as the #9 best real estate market in the US. Among the top 10 housing markets includes cities such as Austin, Dallas, Charlotte, and Charlotte. However, the COVID-19 pandemic has affected all aspects of our lives, and the Boston real estate market is no exception.
But is 2021 a good time to buy an investment property in the Boston housing market? To figure out what the market holds for investors in 2021, you need to dig deeper into the Boston housing market trends. Read on to learn how the coronavirus crisis has impacted the housing market in Boston and what trends you can expect in 2021.
Related: Location, Location, Location: Is Location Really All in Real Estate Investing?
2021 Boston Real Estate Market
Currently, the Greater Boston housing market is a seller’s market. This hot market is characterized by rising Boston housing prices and sales are rising. In September, sales for condos and single-family homes recovered across the Greater Boston housing market after a period of at least several months. This is based on data from the Greater Boston Association of Realtors.
To help you find the best real estate deals in 2021, we have put together the Boston housing market trends to expect in 2021:
1. High Real Estate Appreciation
Appreciation will remain high in the Boston housing market
The Boston real estate market is one of the hottest in the country right now. According to Zillow, the median home price in the Boston housing market has gone up by 80% since 2012. NeighborhoodScout.com also recorded an almost similar growth in home prices for the last decade. The appreciation rate has been more than the national average.
Boston is considered a seller’s market due to the limited supply of homes. The high competition among property buyers often results in higher property prices as well as quicker sales. The number of active buyers is actually greater than the number of homes for sale.
Zillow predicts that home prices in the Boston housing market will continue to increase in 2021. In the next year, a price appreciation of about 7% is expected. This will be a protraction of the steady increase in Boston house prices since the 2008 housing market crash. A Boston housing market bubble is not expected in 2021 or in the near future. This will make the affordability of the Boston housing market a bigger problem for those who want to buy a home.
2. Strong Rental Demand
Due to high property costs in the Boston housing market, most people will be forced to resort to renting. This means that Boston can be a good market for investing in rental property if you have cash or other financing options.
Moreover, Boston is a multitalented metro market with a unique mix of industries. While the housing and business costs are higher than average, population and job growth prospects are fairly good compared to similar East Coast cities. This continues to make the Boston housing market an attractive one for landlords.
Boston is also home to several top US colleges and universities, probably more than any other city in the US. You could purchase income properties across the Boston real estate market to target the huge number of students in the area. When it comes to buying a rental property, Boston is a better market than markets like New York City. All those students and professionals are bidding up the limited supply of housing. This creates a growing demand for more housing.
Related: 10 Best Places to Invest in Real Estate in 2021
3. High Rental Income
If you are looking to purchase Boston rental properties in 2021, you should also expect high rental income for both traditional and Airbnb rentals. If you can get a reasonably affordable investment property, you could enjoy monthly cash flow from the property.
Boston rental prices have remained fairly resilient in the midst of the global pandemic and have experienced only a slight drop. According to a study done by Zumper in November last year, it is the third most expensive rental market in the US after San Francisco and New York. Also, according to RENTCafe, more than 95% of the apartments in the Boston housing market charge a rental price of at least $2,000. This is an indication of how high the rents are in this market.
However, be sure to do the math to make sure that the property will be profitable. You can use Mashvisor’s investment property calculator to conduct a full investment property analysis based on metrics like cash flow, cap rate, cash on cash return, and Airbnb occupancy rate.
Related: Where Should You Invest in the Boston Real State Market?
Best Neighborhoods in Boston for Traditional Rentals in 2021
Since the Boston housing market is quite vast, you should narrow down your property search by identifying the best neighborhoods. Here are the best neighborhoods in Boston based on forecasted cash on cash return:
1. Mission Hill
- Traditional Cash on Cash Return: 3.01%
- Median Property Price: $439,000
- Price per Square Foot: $533
- Price to Rent Ratio: 68
- Traditional Rental Income: $2,333
2. South Dorchester
- Traditional Cash on Cash Return: 9%
- Median Property Price: $388,725
- Price per Square Foot: $412
- Price to Rent Ratio: 77
- Traditional Rental Income: $1,823
3. South Boston
- Traditional Cash on Cash Return: 88%
- Median Property Price: $728,360
- Price per Square Foot: $696
- Price to Rent Ratio: 66
- Traditional Rental Income: $3,252
Best Neighborhoods in Boston for Airbnb Rentals in 2021
1. Allston
- Airbnb Cash on Cash Return: 3.01%
- Median Property Price: $687,700
- Price per Square Foot: $683
- Price to Rent Ratio: 64
- Airbnb Rental Income: $3,910
- Airbnb Occupancy Rate: 54%
2. Charlestown
- Airbnb Cash on Cash Return: 71%
- Median Property Price: $ 749,725
- Price per Square Foot: $ 684
- Price to Rent Ratio: 94
- Airbnb Rental Income: $ 5,231
- Airbnb Occupancy Rate: 75%
3. Mission Hill
- Airbnb Cash on Cash Return: 6%
- Median Property Price: $ 439,000
- Price per Square Foot: $ 533
- Price to Rent Ratio: 95
- Airbnb Rental Income: $ 2,824
- Airbnb Occupancy Rate: 79%
Related: These Top 4 US Neighborhoods are the Best Areas to Buy Investment Property
The Bottom Line
If you are looking to buy an investment property in 2021, you should definitely consider investing in the Boston housing market. In spite of the uncertainty brought by the coronavirus pandemic, the Boston real estate market has remained hot and several experts expect the trend to continue. The above Boston real estate market 2021 trends will help you make an informed investment decision.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
