While Cambridge is technically outside of the City of Boston, data trends in the housing market and in particular the rental market in Cambridge closely mirror that of Boston. Both are highly cyclical markets that depend heavily on apartment turnover from the local student population. So while Boston’s rental market is reeling due to inventory spikes, it should come as no surprise that the same supply issues are occurring in Cambridge.
Cambridge may be best known as the home of two famous universities: Harvard and MIT. Like most of the area’s Universities, both adopted remote learning for the 2020-2021 school year, severely hampering the influx of students we normally see in September.
As a result, the real estate market in Cambridge has experienced quite a bit of fluctuation in terms of vacancy and availability rates. The information listed below is up-to-date and analyzes real-time rates for Cambridge apartments from the Boston Pads database. The real-time vacancy rate is currently at 5.68%, which ties Cambridge with Brookline as the highest vacancy rate of all suburbs. The real-time availability rate is currently 6.68%, which is the second highest among all suburbs behind only Brookline at 8.05%.
To put that in perspective, a year ago Cambridge had the 5th lowest vacancy rate of all 20 suburbs we track in Boston, and the 6th lowest availability rate. What a difference a year can make.
YOY Apartment Vacancy Rates Increases in Cambridge, MA
Cambridge apartment Vacancy Rate (2/2021): 5.68%
- Rank: 1st Highest (tied with Brookline) among all suburbs
Cambridge apartment Vacancy Rate (2/2020): 0.99%
- Rank: 5th Lowest among all suburbs
YOY Change: +473.74%
- Rank: 2nd Highest YOY increase among all suburbs
YOY Apartment Availability Rates in Cambridge, MA
Cambridge apartment Availability Rate (2/2021): 6.68%
- Rank: 1st Highest (tied with Brookline)
Cambridge Apartment Availability Rate (2/2020): 1.75%
- Rank: 5th Lowest among all suburbs
YOY Change: +281.71%
- Rank: 3rd Highest YOY increase among all suburbs
Assessing the 2021 Apartment Rental Market in Cambridge MA
The apartment rental market in Cambridge is still shrouded in uncertainty as remote learning policies for the fall semester have not been announced by most schools. Suffice to say if remote learning is extended into Fall of 2021 at Harvard and MIT, we will likely see the supply issues extend all the way to 2022.
If there’s one positive spin to the current market conditions, it’s that renters that were previously priced out of Cambridge may have an opportunity to find a place in their budget in 2021. Average Rent in Cambridge has decreased by 4.75% since February of 2020, which isn’t a huge drop, but landlords have been able to keep rent prices steady by offering concessions on move in fees. In a healthy market, less than 4% of apartments offer a waived or reduced fees, but now we’re seeing as many as 50% of available apartments in some neighborhoods offering some sort of reduced deposit fees. This will make the barrier to entry in this coveted neighborhood much lower for the average renter.
Regardless of the short term uncertainty related to remote learning and apartment supply in Cambridge, we’re still bullish on Cambridge long term. Universities will once again open their doors, bringing back tens of thousands of students to the Boston area.
In the meantime, the Greater Boston area is seeing such an incredible influx of new opportunity in the form of VC funding which will prop up the housing market in the years to come. Already the 3rd biggest market for VC funding, Greater Boston marked a 48% increase in total deal value last year, with Boston based startups raising over $16B in 2020 according to Pitchbook. That was almost enough to edge out New York for the 2nd biggest VC funded market.
Another reason for optimism is the fact that the median home price in Cambridge actually increased last year because of a shortage in homes for sale in Cambridge. 2020 marked a 4.9% increase in median home value and an 11% reduction in median days on market. This indicates that prices will continue to go up in 2021, which will inevitably push people towards renting that were possibly considering buying. For this reason, the apartment rental market should begin to level off this year even if remote learning is extended.
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