The Cradle of Liberty, Beantown, The Athens of America – whatever you call it, Boston real estate is definitely a hot market to invest in today. The city is considered quite the location for both traditional and Airbnb investment.
Real estate experts haven’t identified Boston real estate as a bubble market. However, home prices continue to rise in the Boston area, and are expected to continue to increase like most cities across Massachusetts and the nation in general. Total home prices, equity gains, as well as appreciation have significantly increased, which is what has made Boston real estate an attractive market for investors.
High demand for Boston real estate can be attributed to Millennials’, the largest generation in the US to date, recent surge into the market in hopes of buying and renting property, as well as growing families looking to settle down and move into larger homes.
Still, Boston real estate does suffer from low inventory and limited supply. According the Greater Boston Association of Realtors’ (GBAR) September report, single-family inventory has dropped by 28.1% while condo inventory decreased by 24.9%. At the same time, supply has decreased by 31.3% for single-family homes, and by 28.6% for condos. Moreover, construction of new homes has been on a lag. As a result, the number of listings is at a very slight to no increase. This means that the shortage problem will persist well into 2017.
In a nutshell, Boston real estate is a sellers’ market. And it will continue being a sellers’ market as long as demand remains high and inventory and supply remain limited. In the greater Boston area, Cambridge takes the lead as the number one sellers’ market.
Related: Is it a Buyer’s Market or Seller’s Market?
Airbnb Boston
Boston has always been a popular tourist attraction in the US. In 2015, the city saw a 6.2% increase in the number of visitors, which makes sense. Boston’s got so much to offer for everyone. Sports fans may visit Fenway Park, home of the Boston Red Sox. Other tourists may indulge themselves in the city’s rich history by visiting the Boston Harbor where the Boston Tea Party took place, The Paul Revere House, the Massachusetts Historical Society, and walk the Freedom Trail. Other attractions include the New England Aquarium, the Boston Museum, and the Prudential Tower.
Airbnb Boston has had fairly flexible laws and regulations since its onset. More recently however, the home sharing business is facing criticisms from city officials who believe Airbnb is contributing to Boston’s low property stock. This has resulted in debate over taking up new regulations for the service. So if you’re considering investing in Airbnb Boston, make sure to stay up to date to any law or regulation changes.
Related: The Trend of Legalizing Airbnb Rentals
Top Boston Real Estate Neighborhoods
Fenway/Kenmore
Officially recognized as Fenway/Kenmore, the neighborhood is known for its cultural and sports attractions. Fenway Park, the Museum of Fine Arts, Symphony Hall, among other destinations, are in the heart of the neighborhood. This makes it a very popular destination among tourists and a great Airbnb investment. If there’s a Boston Red Sox game, expect high occupancy rates for Airbnb rentals in Fenway as thousands of cheering fans take over the area. Additionally, the neighborhood is surrounded by a large number of colleges and universities, which makes not only Airbnb, but traditional investing a good idea.
Fenway
Median Home Price: $445,000
Airbnb Occupancy Rate: 56.53%
CoC Return
- Airbnb: 5.94%
- Traditional: 3.09%
Average Rental Income/month
- Airbnb: $3,317
- Traditional: $2,191
Optimal investment: 3 bedroom apartment rented out on Airbnb
Kenmore
Median Home Price: $938,000
Airbnb Occupancy Rate: 48.75%
CoC Return
- Airbnb: 3.91%
- Traditional: 2.1%
Average Rental Income/month
- Airbnb: $4,337
- Traditional: $3,046
Optimal investment: 1 bedroom condo rented out on Airbnb
Allston
Allston’s got a little bit of everything. From artsy cafés and trendy bars, to business centers and startups, you’ll find college students and young entrepreneurs living side by side. The high concentration of Harvard and Boston university students, as well as up and coming Millennials make Allston an excellent traditional rental investment. The neighborhood’s got an extremely convenient location which makes it popular among Bostonians and tourists alike. And while a better traditional investment, Allston is almost as an equally great Airbnb investment.
Median Home Price: $439,900
Airbnb Occupancy Rate: 47.38%
CoC Return
- Airbnb: 8.44%
- Traditional: 3.56%
Average Rental Income/month
- Airbnb: $4,040
- Traditional: $2,250
Optimal investment: 5 bedroom townhouse rented out traditionally
South Boston (Southie)
South Boston’s appearance in world famous films such as Good Will Hunting and The Departed has given it some extra light. Southie is an especially popular neighborhood among tourists who are attracted to its Irish pubs and vibes, and its eccentric panoramic views. The neighborhood’s also got easy access to downtown as well as the T– Boston’s public transportation system. Moreover, the neighborhood has a distinctive sense of community, as well as several parks and green areas – both of which attract young local professionals and families. So while a better Airbnb investment, Southie can also be a profitable traditional venture.
Median Home Price: $832,000
Airbnb Occupancy Rate: 50.38%
CoC Return
- Airbnb: 2.76%
- Traditional: 1.45%
Average Rental Income/month
- Airbnb: $4,171
- Traditional: $3,135
Optimal investment: A loft rented out on Airbnb
Jamaica Plain (JP)
Jamaica Plain is a suburban Boston real estate neighborhood that flaunts its public green areas which are some of the biggest among the city’s Emerald Necklace – the chain of parks extending along Boston and Brookline. The neighborhood is quiet and not too crowded, which is why it is loved by the locals. And while a bit isolated from the city bustle, it’s got easy access to downtown Boston, which is only a 30 minute T-ride away. JP also has a decent concentration of college students, which is another reason why traditional investment is the optimal plan.
It is important to note that Jamaica Plain has some rough, less developed parts, so make sure to research the neighborhood well, and use Mashvisor’s property comps to select the best property for your investment.
Related: Buying a Rental Property: Should You Go For One Expensive or Two Cheap Properties?
Median Home Price: $595,000.00
Airbnb Occupancy Rate: 46.43%
CoC Return
- Airbnb: 5.7%
- Traditional: 2.72%
Average Rental Income/month
- Airbnb: $4,015
- Traditional: $2,470
Optimal investment: 5 bedroom apartment rented out traditionally
Back Bay
The neighborhood is famous for its gorgeous Victorian architecture, and its fine dining, nightlife, and high-end fashionable shopping experiences. Newbury Street, a top shopping attraction among tourists and locals, is in Back Bay. Back Bay is also considered a cultural center in Boston, and home to the Boston Public Library. The neighborhood is additionally at an excellent location – Downtown is a 5 minute ride on the T, and Boston common, the oldest city park in the US, is well within walking distance. Back Bay is one of the most famous among Boston tourists, which makes it a terrific Airbnb investment – no wonder it’s is one of the most expensive Boston real estate neighborhoods.
Median Home Price: $2,487,500
Airbnb Occupancy Rate: 51.41%
CoC Return
- Airbnb: 3.29%
- Traditional: 1.44%
Average Rental Income/month
- Airbnb: $5,386
- Traditional: $3,412
Optimal investment: A two bedroom house rented out on Airbnb
To Sum Up
Despite the few hurdles regarding inventory/supply and recent Airbnb Boston debate, Boston real estate is expecting a big year in 2017. So is investing in Boston real estate a good idea? Absolutely!
Finally, to make the most out of Boston real estate, remember to use Mashvisor’s investment analytical tools to view information on CoC return, cap and occupancy rates, rental income, and much more. Our interactive investment property calculator will help you decide where you can make the most returns in Boston real estate.