Boston residents looking to rent apartments may have to pay more than those in other cities, as the Hub came in at number three on a list of the most expensive cities to rent in, according to The Greater Boston Housing Report Card 2011.
The report, published by the Boston Foundation and Northeastern University’s Kitty and Michael Dukakis Center for Urban and Regional Policy, was released last week.
The study is part of the Boston Foundation’s Understanding Boston series, which conducts research through forums and educational programs. The report card studies the role of housing in the ongoing economic crisis.
The amount of production, foreclosure and homeownership in Boston is about average when compared to the rest of the country, but apartment rent in Boston is higher than other major cities, according to the study. The average rent of a studio or efficiency apartment in Boston is 16 percent higher than the national average.
Boston’s average apartment rent increases with square-footage.
A one- or two-bedroom apartment in is 51 percent more costly than the national average, and a three-bedroom apartment is 70 percent more expensive.
A range of factors controls rent, but the rental-vacancy rate is the most significant determinant of rent costs, according to the study.
“Currently, we have an active 1,615 units or, roughly translated, a vacancy rate of 2.6 percent,” said Demetrios Salpoglou, CEO and broker of record for Boardwalk Properties, Nextgen Realty and Jacob Realty.
Salpoglou said that the vacancy-rate percent can vary slightly because some luxury buildings do not provide complete information on their actual vacancies.
“Last year at this time, we had about a 5 percent vacancy-rate, so the market is far tighter and the rents are going upwards due to significantly decreased vacancies,” Salpoglou said.
While Salpoglou’s numbers are smaller than the Greater Boston average, as calculated by the study,, they do follow the general trend.
In 2009, the vacancy rate of Greater Boston exceeded 6 percent for the first time in more than 20 years, according to the report card. However, the vacancy rate has been shrinking, and sat at 4.4 percent in the second quarter of this year.
The study calculated the average effective rent to be $1,665, an all-time high for the Greater Boston area. Rental affordability is not expected to improve anytime soon due to “stagnant” household incomes.
“The pricing swings can be dramatic for numerous reasons that would require a more detailed outline, but an overall good guess for the Boston rental market for 2012 would be an 11 to 14 percent increase in price,” Salpoglou said.
Greg Wheeler is the assistant director of the Boston University Office of Rental Property Management, a branch of BU that leases property to faculty, staff and graduate students.
The ORPM allows affiliates to avoid paying a broker’s fee, Wheeler said. He said he agrees that prices have been increasing over the last year and a half, but the ORPM has not determined what the rental rates will be next year.
This record rent is a result of a combination of minimal rental housing production and high demand, according to the report card.
This demand is driven by people seeking rental housing due to foreclosures. Tightened mortgage credit, apprehension about buying into a weak market and increased student demand also cause a higher demand.
“This is a college town, there are 100,000 students in Boston,” said Brett DeRocker, vice president of operations at First Boston Realty International. “That keeps demand high and rent high.”
New York and San Francisco beat out Boston as the nation’s most expensive cities to rent.