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Boston May Surpass San Francisco As Second Most Expensive City In America

Feb 08, 2022
boston
Staff Writer

BeanTown is on track to earning a less endearing nickname for itself — the second most expensive city in the country.

KEY TAKEAWAYS
  • Boston’s median one-bedroom rent could surpass San Francisco’s as more people return to the city in the aftermath of Covid-19. 
  • San Francisco and Boston both saw prices free fall in 2020, yet Boston’s rentals rebounded in 2021 while San Francisco’s has been enduring an ongoing stagnation.
  • In January, Boston’s median one-bedroom rent rose to $2,720, setting a new all-time high. Meanwhile San Francisco’s median one-bedroom rent is $2,850, putting Boston behind by just $130. 
  • The West Coast also saw residents return during the vaccine rollouts but not nearly as much as the East Coast.

Last week, research published by OJO Labs showed that San Diego is now the least affordable metro in the United States, pushing San Francisco and Los Angeles out of the top spots. This week, over in the Northeast, data from Zumper hints that Boston’s median one-bedroom rent could surpass San Francisco’s as more people return to the city in the aftermath of COVID-19. 

Boston is a historical city, home to the beloved Red Sox that broke a near 100-year World Series drought in 2004, kicking off a long string of professional sports titles to the city. However, BeanTown is on track to earning a less endearing nickname for itself — the second-most expensive city in the country.

San Francisco and Boston both saw prices free fall in 2020, yet Boston’s rentals rebounded in 2021 while San Francisco’s have been enduring an ongoing stagnation. This has allowed Boston to come closer to passing San Francisco. In January, Boston’s median one-bedroom rent rose to $2,720, an all-time high. Meanwhile San Francisco’s median one-bedroom rent is $2,850, putting Boston behind by just $130. 

The leap in Boston’s rent prices has been astounding, according to Zumper analysts. In the winter of 2019, San Francisco’s median one-bedroom rent was $1,300 higher than Boston’s. That was before the pandemic hit, and disrupted rental prices across the country. Wealthy residents and young professionals left the cities and prices fell dramatically in both places. Between March 2020 and January 2021, Boston’s median one-bedroom rent fell by 19.2% while San Francisco fell by a staggering 23.4%. 

Over the course of 2021, the rental patterns in both cities began to diverge. Residents from the East Coast started to return to the cities once the vaccine rollout began, pushing rents back up. Data from January shows that Boston’s median one-bedroom rent is up 26.5% year-over-year, up 8.8% from March 2020, meaning it made up all the ground it had lost throughout 2020 — and then some. 

The West Coast also saw residents return during the vaccine rollouts, but not nearly as much as the East Coast. In the major West Coast cities, some metros like the Bay Area have been slow to rebound. In January, San Francisco’s rent was up 6.3% from last year. Compared to March 2020, the city is still down 18.6%, which means it has not been able to make up for losses throughout 2020.

Boston vs. SF rent

When will the West Coast see rents rebound back to normal and reclaim its title for hosting the most expensive metros in America? It’s anyone’s guess, the Zumper report states. 

San Francisco’s job market is heavily reliant on the tech industry, but those companies have really leaned into part-time and remote work flexibility. The return of residents mainly depends on offices reopening in the Bay Area, though analysts believe that we might “look back on the pandemic as an event that permanently lowered rent in the Bay Area.”

National Rent Trends 

Rent prices set an all-time high entering 2022. The median one-bedroom rent on Zumper’s National Index rose to $1,374 this month, which is up 12% year-over-year. The median two-bedroom rent rose to $1,698, a 14.1% jump year-over-year.

January broke the four-month streak of steadily declining rent growth, with median rent for one-bedrooms rising 0.6% since December. However, the fall and winter slowdown in 2021 signals that housing market cycles are returning to normal in 2022 after disappearing in 2020. The January data does not show that, analysts say, because it's just one month of data. 

The huge leap in year-over-year growth for January shows the rapid pace in which rents rose throughout 2021. Year-over-year growth was 0.6% in January 2021 and 0.3% in January 2020.

Big cities on the East Coast saw residents return during vaccine rollouts, driving rent prices back up. Many suburban areas saw a large influx of people who left the city permanently, causing a home-buying boom that priced out a lot of renters who would prefer to buy. This also caused rents to increase. 

The shortage of homes and the unaffordability crisis stem from the 2008 housing crisis, after which annual housing production dropped off substantially; the pandemic only exacerbated the problem further. While post-pandemic demand may fade, the housing shortage is a long-term issue that will keep rent prices elevated throughout 2022. 

Everything’s Bigger In Texas

A large influx of people arrived in Texas throughout the pandemic, largely from California, in search of more affordable housing. So, of course, real estate didn’t stay cheap for long. 

Houston, the fourth-largest city in America, didn’t even make the Top 5 for largest rent growth in Texas. Austin, El Paso, Arlington, Plano, Irving, Dallas, and Forth Worth all came out ahead of Houston, which had a 8.9% increase for median one-bedroom rents. Austin’s 21.1% growth came out on top.

For the most part, though, Texas’ cities had little if any rent growth in 2020 before it started climbing in 2021 like the rest of the country. Between March 2020 and January 2021, the cost of rent in Houston’s median one-bedroom apartment dropped 1.8% before rising throughout 2021. 

The surrounding suburbs of Dallas and Austin saw a major boom in rent and home prices, with Galveston (4.4%), Pasadena (1.2%), and Spring (8.2%) posting modest year-over-year gains in January.

About the author
Staff Writer
Katie Jensen is a staff writer at NMP.
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