Conversation about how new supply impacts Boston housing costs
Boston Condos for Sale and Apartments for Rent
Conversation about how new supply impacts Boston housing costs
There is a growing debate about whether new high rise buildings increase or decrease downtown Boston housing costs.
Some argue new market-rate development produces a supply effect, which should alleviate the demand pressure on existing condos for sale or apartment rental units and decrease rents and condo prices.
Others contend that new development will attract high-income households and new amenities, generating an effect and driving up rents and condo prices
You might think adding supply for Boston condo and rentals brings prices down, yet when a lot of new Boston high rise condo and apartment buildings go up in a neighborhood, the Boston media reports median asking Boston apartment rents goes up. But wait, doesn’t that defy the laws of economics?
It is simple math some would argue: these new high rise buildings are priced above the median sale or apartment rental price to make their investment work, so the median rises.
On the flip side, tenants in older, occupied units like Beacon Hill enjoy smaller increases than usual when they renew leases because their landlords don’t want to lose them to the nicer high rise buildings.
But here is what you need to know, the media reports based on listings, not renewals, which are released to the media each month. They show Boston housing costs, soaring as a flood of luxury buildings started leasing.
The danger is that someone will publish a story linking development with rent increases, fueling the myth that adding supply makes Boston housing more expensive.
A substantial body of long-term research demonstrates that increased inventory moderates rent,” they wrote, ” … the effects of increased supply on demand — and the resulting moderation of rent growth — emerge only over time.”
Let me clarify that last paragraph:. Census data, and the sophisticated housing studies that use it, take much longer to come out. They offer a fuller, more accurate picture that includes lease renewals.
Those analyses all show exactly what you’d expect: Apartment rents rise faster when housing development does not keep pace with demand, and slower when it does.
Boston condos for sale and rent and the Bottom Line
The laws of economics have not changed, folks. They will never change.
Peace be with you
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Boston condos for sale – Ford Realty Inc
Updated: Boston Condos for Sale Blog 2025
Byline – John Ford Boston Beacon Hill Condo Broker 137 Charles St. Boston, MA 02114
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