Newton MA Average Property NOI
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.
Boston's Rental Market Starts Year In Deep Freeze
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%).
South End Apartment Rental Market Report 2022
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.
Cambridge MA Average Property NOI
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 Apartment Vacancy Rate Sits At .11% After Hitting 17.87% In September 2020
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.
Allston MA Average Property NOI
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).
Boston Suburbs With The Worst Average Cap Rates
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.
Boston Suburbs With The Best Cap Rates
If you’re a property investor in Boston, you’re probably aware that cap rates have been super low in the core neighborhoods of the city. Prices for Boston real estate have skyrocketed to absurdity, making it difficult to find profitable investments in the city’s core neighborhoods. Right now, the suburbs are carrying the best average cap rates in the Boston metropolitan area without question. In fact, the top 10 best metro neighborhoods by average cap rate are all located outside of Boston proper.
In order to calculate the average cap rate for a neighborhood, we’re projecting yearly revenue based on the current average rent price in that area multiplied by twelve. We’re using the median sale price for each area and property type as the cap rate denominator.
Based on this math, we can get a rough estimate of what an average cap rate would look like for a neighborhood. Here are the top 4 neighborhoods by average cap rate in Metro Boston:
Where In Boston To Buy Real Estate
Times are tough for first-time buyers in Boston’s highly competitive and expensive real estate market. Home prices are at all-time highs, inventory has remained low, and now with interest rates going up, it may seem that home ownership is slipping further away from reach.
Despite its challenges, the housing market in Boston still provides some areas of opportunity for home buyers. Believe it or not, you can still find houses for under $500K in areas that are not too far from Boston’s core neighborhoods. Here are some of the best places to buy Boston real estate in 2022.
Cambridge YOY Rent Price Change Back in Black
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.
