How Is The Boston Housing Market For Real Estate Investment?

There are currently 85 properties in Boston, MA that are in some stage of foreclosure (default, auction or bank owned) while the number of homes listed for sale on RealtyTrac is 117. In January 2020, the number of properties that received a foreclosure filing in Boston, MA was 4% higher than the previous month and 56% higher than the same time last year.

In Boston, the zip code with the highest foreclosure rate is 02111, where 1 in every 1926 housing units is foreclosed. 02120 zip code has the lowest foreclosure rate, where 1 in every 5277 housing units becomes delinquent.

Is Boston a Good Place For Real Estate Investment?

Now that you know where Boston is, you probably want to know why we’re recommending it to real estate investors. Investing in real estate is touted as a great way to become wealthy. Is Boston a Good Place For Real Estate Investment?Many real estate investors have asked themselves if buying a property in Boston is good investment? You need to drill deeper into local trends if you want to know what the market holds for the real estate investors and buyers in 2020.

If you are looking to make a profit, you don’t want to buy the most expensive property on the Boston real estate market and expect to make a good profit on rents. Perhaps you are looking for a slightly different hold-over, an investment property in Boston that you might move into or sell at retirement in the future. Either way, knowing your profit potential and purpose is the first thing to consider.

Investing in Boston real estate will fetch you good returns in the long term as the home prices in Boston have been trending up year-over-year. Let’s take a look at the number of positive things going on in the Boston real estate market which can help investors who are keen to buy an investment property in this city.

1. Boston is Attractive to Millennials
Millennials are a market real estate agents want to cater to, since they’re buying homes in mass. And Boston is considered one of the cities Millennials love. The challenge for Millennials is affording a market where the median home costs around $740,000. Yet the demand from young and old alike means there’s very little inventory, much less housing stock considered affordable.

2. It Is Attracting Immigrants
Boston isn’t just attracting young people from across the country – it is also attracting immigrations from around the world. The city has seen population growth every year since 2004 in part because of the influx of immigrants attracted to the healthcare, biotech and educational jobs here.

3. The Boston’s Job Market Will Keep People Coming
Boston was ranked the best city in the U.S. for startups. The large number of world class universities provides a large number of skilled workers, many of whom work in medicine, finance and biotech. The constant creation of new jobs will continue to attract residents and help the city retain the ones it already has. The economy is dominated by services, which usually pay high wages and attract more and more job seekers. All these factors have created a hot housing market in Boston, dictated by both home buyers and tenants.

4. Guaranteed Real Estate Appreciation
Strong demand plus limited inventory and limited space to grow will guarantee appreciation of any property you buy in the Boston real estate market. While 2020 will see home prices across the country increase between 2% and 6%, Boston will be at the upper end of that range. This is only a continuation of the steady property increases seen since the 2008 property crash. This is partially due to the fact that the market is so built-up already that land prices are high.

Then there’s the fact it can take a long time to get approval to build up. Boston’s mayor is facing flak for wanting to waive the building height rule just once. Ironically, the Boston shadow law that limits the height of buildings in the Boston housing market has the greatest impact on the downtown areas where people most want to see tall apartment and condo towers built.

5. Downtown Is Hot Market
Millennials and older adults alike are choosing to spend more on an apartment, condo or house to avoid spending hours each week commuting. It is seen as an investment in their quality of life. This explains why downtown Boston is seeing price increases far higher than the rest of the Boston metro area. Condos in downtown Boston at the end of 2018 averaged over $800,000, well above the median sale price in the Boston housing market of $618,000.

Downtown enclaves sell for much more per square foot than properties at the edge of town or in the suburbs; the price hit a thousand dollars a square foot recently. That’s expensive for the U.S. but half the price you’d pay for a comparable apartment in New York City. Ironically, the high price of real estate in NYC explains why many financial firms are expanding in the relatively cheaper city of Boston, home of the mutual fund.

6. Deals Are Becoming Available
The increase in mortgage interest rates is putting pressure on home buyers, limiting what they can afford. This in turn is leading to home builders to cut prices on new properties. According to the Washington Post, Boston home builders are cutting the price of properties on the market by 6%. If you have financing or the cash to invest in the Boston real estate market, you can’t pass up a deal like this.

7. The Huge Educational Market Is an Opportunity
The Boston real estate market and its environs include a whopping hundred universities, colleges and trade schools. There are more than 150,000 college students in Boston and Cambridge alone. You could buy properties across the Boston real estate market and cater to students, and your market is so diverse that you’ll always see demand.

8. Bureaucracy Limits Supply
Boston is an old, East Coast city. We’ve already mentioned the height law and the challenges faced getting anything approved even with the mayor behind it. Unfortunately, Boston’s entrenched bureaucracy limits the redevelopment of large garages and other major projects that could bring thousands of units to the Boston real estate market. If it takes ten years (or more) for the Boston Harbor Garage to be redeveloped, and it is far from the only project on hold, then you can be certain to see high returns on any redevelopment project that creates more housing units within existing buildings. Whether this is converting warehouses into lofts or single family homes into multi-family housing, if you don’t face major roadblocks, you’ll see a great return on the investment.

9. Boston Is Landlord Friendly for the Northeastern U.S.
Boston is landlord friendly compared to markets like NYC. There is no limit on late fees. You don’t have to provide notice before entering the apartment. The state doesn’t require rental licenses to become a landlord. There aren’t laws regarding re-keying or pets. A written rental agreement is only mandatory if your tenant is staying more than 12 months. Evictions are allowed if they are not paying the rent, violating the lease, or breaking the law. You can start evictions two weeks after non-payment of rent. Since evictions can take weeks, screen tenants well for any property in the Boston housing market.

10. You’ll Enjoy High ROI
Rents in the inner Boston Core hit 2800 a month. All those grad students, young single professionals and highly paid power couples are bidding up the limited housing stock available. If you can find a reasonably affordable property in the Boston real estate market and convert it to multiple units or a more upscale clientele, you’ll enjoy significant cash flow from the property. Any future real estate investor in Boston should also have in mind that the expected rental income for both traditional rentals and Airbnb rentals is high.

The combined effect of high property prices and high rental income leads to decent return on investment for Boston rental properties. The taxes here are high compared to the U.S. average but lower than several other states in the area. The income tax rate is much lower than New York, and property taxes are far lower than New Jersey. Therefore, you’ll clear more here than some of the other large Northeast markets.

Luckily for real estate investors in Boston who are interested in Airbnb rentals, they are fully legal in the Boston real estate market and are not even taxed at the moment. Recent discussions among Massachusetts lawmakers failed to result in an agreement on taxes to be charged on short-term rentals.

Investing in Boston Real Estate or Not: The Conclusion

Maybe you have done a bit of real estate investing in Boston, MA but want to take things further and make it into more than a hobby on the side. It’s only wise to think about how you can and should be investing your money. In any property investment, cash flow is gold. Boston is the top market where real estate investments are safe and have high rates of return.The Boston housing market sees steady population growth, faces limited supply, and can’t really go vertical. This means that those who invest in the Boston real estate market will see decent cash flow from nearly any property and guaranteed appreciation. Allston is an excellent neighborhood to buy an investment property in Boston as the median property price is well below the city level. Airbnb rentals are the best option for real estate investing in Boston.

A good cash flow from Boston investment properties means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt. Therefore, finding a good Boston real estate investment opportunity would be a key to your success. If you invest wisely in the Boston real estate, you could secure your future.

As with any real estate purchase, act wisely. Evaluate the specifics of the Boston housing market at the time you intend to purchase. Hiring a local property management company can help in finding tenants for your investment property in Boston. If it is your first time to invest in Boston real estate, then you would have to be aware of common beginner’s mistakes. Beginners would usually follow the media, buy a property and wait for its value to increase. This could be risky. Real estate investing requires research. We recommend doing your own research or hiring a real estate investment specialist for guidance.

Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. If housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market area, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing and interest rates.

NORADA REAL ESTATE INVESTMENTS strives to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in the U.S. growth markets. We can help you succeed by minimizing risk and maximizing profitability.

The aim of this article was to educate investors who are keen to invest in Boston real estate in 2020. Purchasing an investment property requires a lot of studies, planning, and budgeting. Not all deals are solid investments. We always recommend to do your own research and take help of a real estate investment counselor.

Other Good Markets To Invest in Real Estate in 2020

Apart from the Boston real estate market, you can also invest in Jersey, City. The Jersey City housing market is seeing significant growth because it is close to New York City but isn’t NYC. It has a number of points in its favor, too, like a good job market and local amenities. Renters and buyers alike are taking notice and helping to make Jersey City the fastest growing metropolitan area in the state. Jersey City has been busy redeveloping old neighborhoods, encouraging a mix of new retail, luxury housing and affordable housing.

Jersey City is notable for the major redevelopment on the waterfront, known as the Shore, while properties there enjoy a great view of Manhattan. Jersey City takes things one step further and is setting up a “Friendly Building Program”, where developers build entire buildings where renting through AirBnB is allowed. This is an innovative development in the Jersey City housing market.

Another market that we suggest is the housing market in Pittsburgh, PA. The Pittsburgh real estate market 2020 is seeing an incredible renaissance unlike many other Rust Belt cities. It is attracting new residents, redeveloping its downtown. And it is an excellent place to invest in real estate while it is still in the early stages of its rebound. Huffington Post gave Pittsburgh the seventh slot on the top ten places to be a landlord. They used the average three bedroom rent of $991 a month and median home price of $105,700 to get a gross rental yield of 11.3%.

The highest grossing rental market was 15.3%, but it is rare for cities to achieve that rate, much less sustain it. Pittsburgh has been recognized as one of only four metropolitan areas out of 200 studied by economists at Realtor.com currently sustaining an optimal balance between supply and demand. This means that it’s simultaneously a good market for both buyers and sellers, as there is no dearth of  affordable properties available on the market and values are steadily increasing.