College neighborhoods see rents drop dramatically

Fall House Hunt Renting
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Labor Day weekend in Boston and Cambridge usually heralds the annual influx of returning and new students: Moving vans are stuck under Storrow Drive’s low bridges; streets are blocked; locals are annoyed.

But not so much this year.

The effects of the COVID-19 pandemic in many cities has resulted in an urban exodus comprising workers who have lost jobs, people afraid of close living conditions, those who wanted to move closer to family members, and large populations of students. Most of these exiting citizens were renters, causing a decrease in rents nationwide.

Zillow, the online home sale and rental site, monitored rents from February to August, reporting the now-troubled rental market is even more adversely affected in neighborhoods traditionally populated by students.

“Across the board we are seeing rents softening but, clearly, college areas are showing the highest decreases — every college neighborhood in Boston saw decreases from February,” said Cheryl Young, Zillow senior economist.

Zillow, which has collected rental data since 2017, surveyed rents in ZIP codes where college students make up at least 20 percent of the population. Until February, these neighborhoods saw average rents growing 4.7 percent annually.

Locally, the 02215 ZIP code near Boston University, for example, saw rents grow around 4.4 percent annually until 2020.  Now they’re down 4 percent. The average monthly rent around BU has fallen $206 per month since spring.

“One of the biggest hits to growth is Kendall Square, around the MIT area, where rents are down 9.5 percent,” said Young, who is based in San Francisco but studied at Harvard Kennedy School in Cambridge and lived on Mass. Ave., near Central Square, and then in Somerville’s Davis Square. “The area around Tufts Medical Center downtown is down 8.5 percent, and the Northeastern [University] neighborhood is down 7.2 percent.

“Boston is regarded as a stable rental market that has seen nothing but growth in prices and higher rents year after year,” Young continued. “Then all of a sudden, this year prices dropped.”

Two million more 18- to 25-year-olds were living at home in August than there were a year earlier (an 11 percent jump), and the increase was sharpest among Black, Asian, and Pacific Islander young adults.

“Demographically, with races and ethnicity, we see a higher percentage moving back in with family at this time,” said Young. “But that might be in line with cultures where families traditionally live together in larger groups.”

For renters, this situation is advantageous.

“Renters are more in control right now and concessions are way up,” Young said.

“That is translating to rent decreases of $200 to $300 per month. In Kendall Square it is as much as $400 less. Landlords are offering incentives like one or two months rent free or a free Dish service, things like that.”

But some landlords are feeling the pinch as they struggle with property taxes, maintenance, and mortgages.

“Mom-and-pop landlords are really having a tough time,” Young said. “Protections are favoring renters. I don’t know what protections landlords have and how they will get help.”

This negative trend will likely continue through 2020. Zillow’s report quotes the Chronicle of Higher Education and Davidson College’s data showing 44 percent of US colleges and universities are operating fully or primarily online for the fall semester. Only 27 percent have classes fully or primarily in person.

“I don’t imagine we will see any uptick soon. It’s hard to say when that might happen,” Young said. “If it’s possible to get students back, then things might stabilize. There’s a general slow down in rent prices, but the college area’s decline will probably go through to the beginning of next year.”

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