The Boston Metro’s median home price has shown some signs of decelerating since mid 2021. After a decade of record price growth, Greater Boston’s 1-year median sale price sits at $681K as per Zillow’s most recent data. That marks a 2.29% increase in median price compared to the previous year. Compare that to the 16.03% growth recorded in the previous year, it may appear that Boston’s real estate market is leveling off.

While there are certainly signs that the market may be cooling, there’s plenty of evidence to suggest that Boston’s housing market growth will continue in 2022.
VC Funding Flowing To Boston

As the price of real estate has soard all around Boston in the past decade, prices for homes for sale in Quincy have remained relatively reasonable. Out of the 48 neighborhoods in metro Boston, Quincy ranks in the top 10 most affordable for single family, condo, and multi family properties. Quincy’s market held strong during the pandemic as demand has risen for housing in suburban areas with easy access to the city.

As a result, few neighborhoods have as much upside as Quincy in terms of investment properties. In this article, we’ll analyze the average cap rates and net operating income (NOI) that different types of properties would yield in Quincy. We’ll base these estimates on the current median sales price, homeowner’s insurance, property tax rate and average rent prices.

It’s no secret that the city of Austin, TX has been rapidly ascending in recent years. Texas has seen a huge influx of new residents, and no other Texas metro has seen a bigger population boom than Austin. As a result, last year Austin tallied the 4th largest increase in median sales price and the 7th largest average rent increase out of the top 100 metros in the US.

So why are people flocking to this North Texas hub? Well, there are a few reasons.

Newton’s investment property market is a tough nut to crack for many investors. Newton real estate prices are north of a million for single family ($1.6M) and multi family ($1.1M) properties, and condo pricing is not far off at $910K. Looking at pricing like that on its own is enough to turn off any investor. However, there are still opportunities to be had in Newton.

Average NOI in Newton by Property Type
If we isolate projected NOI figures by property type, we won’t find many areas of opportunity related to single family or condos for sale in Newton.

We’re less than 2 months into 2022, and the apartment rental market in Boston has yet to come out of hibernation. Historically, Boston’s rental market cycle begins to kickstart in the first few weeks of January as students return for the second semester. We typically see apartment availability start the year between 2-3%, and it usually doubles in the first two months of the year.

That is not the case so far in 2022. We began the year with record low apartment availability at 1.67%. Since then, availability of Boston apartments has increased to 2.81% in the city, which is still well below its pre-COVID level in February of 2020 (4.03%). Even vacancies are down by similar margins. The current vacancy rate of 0.63% is half that of its February 2020 level (1.28%).

We are into the fifth month of 2022, and demand for South End apartments is stronger than it’s ever been. Following a year and a half of market uncertainty, demand came roaring back in the latter half of 2021. By January of this year, apartment availability in South End had contracted to an all-time low of 0.40%. As of May 1, apartment occupancy has hit an astonishing 99.9% in Boston’s South End.
Record Low Vacancies in South End Boston

The most recent apartment data for South End shows a staggeringly low real-time vacancy rate (RTVR) of 0.10%. While South End is no stranger to low vacancy rates, the neighborhood has never recorded an RTVR this low. Considering that the RTVR doesn’t hit its annual low until late August, it’s possible that South End could achieve 100% occupancy before the end of the leasing season.

If you had invested in a rental property in Cambridge 20 years ago, you’d likely be sitting on a pretty valuable piece of real estate at this point. Both average rent and real estate prices have been outpacing the metro average for some time now in Cambridge, and it is now the most expensive suburb to rent an apartment in Metro Boston, surpassing Brookline in 2020.

Even in terms of median sale prices, Cambridge holds the 7th highest median price for single family and the 10th highest condo median sales price. Homes for sale in Cambridge sold at a 1 year median of $1.93M while Cambridge condos sold at a median of $892K during the same time span. With prices like that, you may be fooled into thinking that an investment in Cambridge is not the right choice.

However, if you dive a little deeper into the data, you’ll find that there are actually opportunities for profitable real estate investments in Cambridge for smaller property sizes. Before we get into this, let’s look at how we measure an area’s profitability based on average NOI (Net Operating Income) for Cambridge.

Fenway’s inventory of empty apartments has almost reached zero. According to the most recent Fenway apartment data from Boston Pads, the current vacancy rate sits at .11%, down 90% from its pre-pandemic level in February 2020 (1.01%). Even more astounding is the fact that Fenway’s vacancy rate skyrocketed to an all-time high of 17.87% in September of 2020.

Fenway’s supply disruption and subsequent recovery over the past 2 years can largely be attributed to remote learning. Given its close proximity to the city’s largest universities, Fenway’s apartment rental market is fueled by the demand for off-campus apartments near Boston University and Northeastern. When campuses closed in Fall 2020, the effects on the rental market were devastating.

NOI In Real Estate Explained | FortuneBuilders
Allston’s housing market is among the most active in Boston by far. Primely situated 10 minutes from downtown and close to most of the area’s largest Universities, housing in Allston is always in high demand. It is a thriving market for off campus housing in Boston, so landlords who rent out apartments in Allston tend to see high turnover coupled with even higher demand.

So it should come as no surprise that Allston is a favorite neighborhood among property investors in Boston. Despite having one of the lowest median condo prices in Boston, the 1 year median sales price for Allston multi family homes ($1.79M) is among the 10 highest in Boston, eclipsing that of Cambridge ($1.76M) and South Boston ($1.51M).

Generally speaking, Boston’s suburbs have some of the best cap rates among all Boston neighborhoods. Median sale prices tend to be much lower in the outskirts of the city, as they have skyrocketed in the city’s core neighborhoods over the past decade. That being said, some of Boston’s suburbs are every bit as expensive as some of the city’s premium real estate markets.

These suburbs in particular,do not yield the highest cap rates on average. In our cap rate calculation, we take the average rent price times twelve to project yearly revenue. We use the median sales price for each property type as the cap rate denominator.