Real Estate News
The founding dean of the Northeastern’s School of Public Policy and Urban Affairs said universities can build more student housing, developers could opt into the ‘co-housing movement,’ and legislators can allow accessory dwelling units to ease the housing crisis.
Last year marked a bright spot for renters across the United states as average wages grew faster than rents.
Not so in metro Boston.
In 2023, rents grew in metro Boston by 5.8%, while wages decreased by 1%, according to the May 7 Zillow report, which broke down the real estate marketplace’s rental data and Bureau of Labor Statistics figures on average hourly earnings.
The trend is similar elsewhere in the Northeast and comes amid a housing crisis. In New York City, rents rose 8.6% last year, while wages swelled by only 1.2%, according to Zillow. (The Big Apple’s figures, which take into account its five boroughs, come in part from data StreetEasy, a Zillow subsidiary, collected.)
Housing is the one of only a few elements in a household’s budget that varies dramatically from city to city, said Barry Bluestone, founding dean of Northeastern’s School of Public Policy and Urban Affairs and professor emeritus.
For products like trucks, he said, companies can usually increase supply as demand increases. This is difficult when it comes to housing, he said.
“In many cities like Boston, there’s very little new housing,” said Bluestone. “And as a result, if demand goes up, the supply isn’t there to meet it, and therefore, prices go up.”
| METRO AREA | RENT INCREASE 2019-23 | WAGE INCREASE 2019-23 | RENT INCREASE 2023 | WAGE INCREASE 2023 |
|---|---|---|---|---|
| New York City* | 27.5 % | 11.2 % | 8.6 % | 1.2 % |
| Cincinnati | 36.5 % | 15.2 % | 7.3 % | 0.9 % |
| Providence | 44.2 % | 22.4 % | 7.3 % | 3.4 % |
| Hartford | 35.5 % | 7.6 % | 7.1 % | 3.9 % |
| Buffalo | 35.5 % | 12.8 % | 6.2 % | 0.7 % |
| Kansas City | 33.3 % | 10.1 % | 6.1 % | 4.9 % |
| Louisville, Ky. | 31.7 % | 23.0 % | 6.1 % | 4.4 % |
| Columbus, Ohio | 30.6 % | 21.9 % | 6.0 % | 4.3 % |
| Milwaukee | 25.8 % | 26.3 % | 5.9 % | 5.5 % |
| Boston | 22.4 % | 13.4 % | 5.8 % | -1.0 % |
| Chicago | 22.3 % | 8.5 % | 5.4 % | -0.1 % |
| St. Louis | 31.2 % | 22.6 % | 5.4 % | 5.6 % |
| Cleveland | 32.1 % | 16.4 % | 5.1 % | 0.8 % |
| Virginia Beach, Va. | 35.5 % | 25.3 % | 4.9 % | 5.2 % |
| Pittsburgh | 22.7 % | 12.5 % | 4.7 % | 3.0 % |
| Washington, D.C. | 18.0 % | 12.8 % | 4.6 % | 3.5 % |
| Indianapolis | 37.2 % | 6.6 % | 4.5 % | 2.7 % |
| Oklahoma City | 28.9 % | 19.7 % | 4.2 % | 2.5 % |
| Philadelphia | 24.2 % | 14.8 % | 4.0 % | 2.0 % |
| Detroit | 31.4 % | 22.0 % | 3.6 % | 4.2 % |
| Baltimore | 22.8 % | 8.0 % | 3.5 % | 2.6 % |
| UNITED STATES | 30.4 % | 20.2 % | 3.4 % | 4.3 % |
In the United States, Zillow reported that the median rent increased 3.4% in 2023 compared to a 4.3% increase in wages. This bucks the trend of the past few years, as rents increased 30.4% between 2019 and 2023 in the United States, while wages increased only 20.2%, the real estate marketplace said.
Between 2019 and 2023, rents increased by 22.4% while wages grew by only 13.4% in metro Boston, according to Zillow.
“The problem for many coastal cities, including Boston and New York City,” said Zillow and StreetEasy senior economist Kenny Lee, “has been really [the] undersupply of new apartment buildings. Labor markets have been pretty strong. That pushes up demand for rentals. However, the supply of newly built apartments just wasn’t enough to keep up with the demand.”
People try to spend about 30% of their income on rent, Bluestone said, citing his own figures. In Seattle, he said, the mean annual rent is only 28% of the median household income. In Washington D.C., the ratio is higher at 36.3%. In New York, the figure is a whopping 69.1%, and Boston’s ratio is slightly lower at 61%.
In Boston, some of the difficulty has to do with zoning, Bluestone said. He pointed out that it’s illegal in many towns and cities to build accessory dwelling units. Bluestone has pushed for municipalities to allow these units for a long time, he said, and Governor Maura Healey is trying to make this change.
Between 2019 and 2023, rents increased by 22.4% while wages grew by only 13.4% in metro Boston.
Developers here have to jump through many hoops to add new housing, Bluestone said, so they tend to build developments elsewhere because it’s easier and less expensive.
But demand on housing may weaken as baby boomers retire and leave Boston to be near children in other cities, move to warming climates, and enter senior housing, Bluestone said. He also said Greater Boston is facing a labor shortage as workers, such as plumbers, can head to cities where housing costs are lower and they can still secure work.
“So, on the one hand, we may see some of these people leaving, which would reduce the cost of housing a little,” Bluestone said. “The … negative part of that is — and I’ve talked with the governor about it, the mayor about it — where are we going to get replacements for those workers when I need an electrician, I need a plumber, I need a nurse?”
Bluestone said there needs to be more pressure on universities to build more student housing. He also said co-living developments, where people rent by the bedroom in units that typically have shared kitchens and amenities, may also alleviate pressure.
“So I think universities could do more, and I think developers could work more with this co-housing movement, as well as passing legislation that would allow much greater development of ADUs,” Bluestone said. “I think if we could do all of those simultaneously, we would begin to see some improvement in the housing market.”
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