2023 Cambridge Apartment Rental Market Forecast
With apartment supply figures so low and continuing to push lower, it does not appear like rent prices in Cambridge will fall in the foreseeable future. The area is desperate for new inventory, but without a massive influx of new multifamily housing the short-term outlook does not look optimistic for Cambridge’s supply issue. Additional zoning reform is needed to increase smart growth, height, and density.
With inflation still above the Fed’s target, interest rates will continue to rise over the next few months which will most likely push would-be buyers towards renting. This will cause more renters to renew their leases that would have otherwise purchased their own home. This additional renter demand will further exacerbate the current supply crunch we’re experiencing, which will only work to increase prices further. The city must do everything in its power to increase the number of new housing units to meet growing demand. There also has to be a keen focus on increasing supply of energy and driving that cost down to tame inflation. There is no escaping bad energy policy as it ripples through all aspects of every day life, in all segments of the economy.
Unfortunately, city officials indicated they are currently prioritizing rent control over new housing unit creation as a means to combat rising rent prices, following Boston’s lead. This will only further disincentivize developers from building new units in the metro area, who are already experiencing soaring construction costs due to high energy prices and rising interest rates. Focusing on demand destruction has never worked in any city and always leads to less choices and older housing which eventually drains talent out of our area.
Cambridge has been a prime target for new venture capital over the past decade, which has put extreme demand pressure on the already limited supply of housing units. The only way out of the current situation is to pave an easy path for developers and landlords to add to Cambridge’s inventory of housing units. Affordable housing providers need to push back on all the NIMBYism that slowing down the supply chain of new housing stock. We will continue to monitor these housing trends as they develop.
