By Maya Shavit
With diplomas in hand, a mass exodus of recent college graduates could be leaving Boston even though they love it here.
In Boston and across the country, average rent peaked at more than $4,000 in 2022, at the tail-end of the Covid-19 pandemic. The last time that it was cheaper to buy than rent in the city was the national housing crash in 2007, according to CBRE.
Recent research from the Greater Boston Chamber of Commerce and from national real estate firm CBRE found that 25% of young residents are planning to leave Greater Boston in the next five years — despite almost 90% of them loving their day-to-day lives in the city.
“The cost of living here is really causing them to look at other cities, look at other opportunities out of state, where the rent isn’t so high and where buying a home is more of a possibility,” said Casey Baines, senior communications director for Boston Chamber of Commerce.
Nationally, the average monthly mortgage payment is more than $3,500 while the average rent is $2,600, according to CBRE. Higher interest rates, as the Fed tries to tamp down inflation, have driven mortgage rates up significantly.
“The sharp increase in the cost of buying has made it increasingly difficult for individual and families to make the transition from renting to owning,” said Matt Vance, Americas head of multifamily research for CBRE.
Nationally, mortgage rates have increased 75% since 2019, and were 38% higher than the cost of renting a similar apartment at the end of 2023. Boston mortgage and rent payments follow the trend.
CBRE expects that, nationally, mortgage payments will return to their pre-pandemic levels by 2028, when it was cheaper to buy than rent. In Boston, the firm predicts that there will still be a premium to rent that is more than double what it was in 2019.
As a result, CBRE estimates a shortage of 3.8 million single-family homes and smaller multi-unit dwellings. That’s a sector of housing that accounts for 90% of the overall deficit and is expected to challenge the nation until at least 2029.
Some cities like Dallas, Raleigh and Chicago will follow the same patterns as Boston, but others like Los Angeles and Seattle will not.
“We know that when people of any age, and especially our young residents, when they are able to buy a home that allows them access to build generational wealth that maybe their family didn’t have before,” said Baines.