Sunday, January 30, 2022
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Rhode Island’s economy has become more and more intertwined with Boston’s. Tens of thousands of Rhode Islanders now work in the Boston metro area. And, more and more Massachusetts residents are relocating to Rhode Island seeking less expensive real estate costs.
In December, Rhode Island’s real estate prices were up 15.3% over a year earlier.
Not only are the prices of homes skyrocketing, but also the prices of apartments – especially in more upscale apartments in Providence in which a one-bedroom unit can fetch $2,000 a month.
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What is driving the multi-year increase in real estate in Rhode Island — look no further than the explosive increase in apartment prices in Boston.
The relatively less expensive Rhode Island is good news for the Rhode Islanders who work in Boston and are paid a Boston salary, but for Rhode Islanders living and working in Rhode Island, it just means a more expensive cost of living.
Boston May Soon Surpass San Francisco for the Price of an Apartment
San Franciso is ranked as the second most expensive city in the United States — second only to New York City.
According to the price tracking by the real estate website Zumper, San Francisco currently holds that title after falling behind New York in the summer of 2021. But San Francisco’s stagnant rent growth coupled with Boston’s dramatic rebound has the latter within striking distance of the former. In January, Boston’s median one-bedroom rent rose to $2,720, setting a new all-time high. San Francisco’s median one-bed rent is $2,850, putting Boston just $130 behind.
Boston apartment prices have jumped 26.5% year-over-year for a one bedroom and that is helping to drive the price increase in Providence — up 8.2% in the past 12 months.
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“It’s hard to overstate how astounding that is. In the winter of 2019, San Francisco’s median one-bedroom rent was $1,300 higher than Boston’s. But the pandemic disrupted rental patterns all over the country. Wealthy residents and young professionals left the city and prices went into free fall in both cities. Between March 2020 and January 2021, Boston’s median one-bed fell by 19.2 percent, while San Francisco’s fell by a staggering 23.4 percent,” reports Zumper.
Prior to the pandemic about 25,000 took the MBTA from Providence/Stoughton train into Boston daily — that number has decreased while workers were working from home. But, that number is expected to rebound and potentially increase due to the number of workers from Massachusetts renting and now, new home buyers in Rhode Island.
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Further tying the two cities together are thousands of Rhode Island homes that have been purchased by Massachusetts residents.
Recent data indicates that 24% of all realtor-assisted property sales involved buyers from other states. In the luxury market comprised of properties sold for $1 million or more, 53% of sales are derived from out-of-state buyers.
“With the threat of climbing interest rates and rising rents, buyers are focused on securing a home with a steady mortgage payment to help stabilize expenses. They’re often competing with out-of-state buyers who are turning to Rhode Island because our market is still a bargain, even with the rise in prices that we’ve seen. The median single-family home price in Massachusetts last month was $520,000. Compare that to our median price of $375,000, add in the allure of coastal living and close proximity to Boston, and it’s easy to understand Rhode Island’s appeal. But, with the increased number of those buyers adding to the depletion of our housing inventory, there’s much work to be done to shore up our housing stock,” commented Del Borgo.
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