The small apartment market continues to show a striking level of appreciation. The Zaxia Survey of Greater Boston small apartment prices for Q2 of 2021 shows a year-over-year price increase of more than 25%. (See chart in Market Trends.)
The rate exceeds the median single-family rate increase for Greater Boston (14% from May of 2020 to May of 2021). However, it is consistent with strong single-family and condominium increases in Greater Boston’s low-income communities and is consistent with increases in many markets that had previously lagged nationwide.
Both nationally and in Greater Boston, experts attribute the single-family trend to pent-up demand and a lack of inventory of properties for sale, as suburban homeowners sit pat in their existing homes and buyers can find fewer available houses for sale.
The cause is likely different for small apartments. The number of sales of three-families tracked by Zaxia is more in Q2 of 2021 than it was in Q2 of 2020. The supply of small apartments for sale has not decreased. But it is likely that the number of buyers competing for small apartments has increased. That, together with lower mortgage interest rates, would explain much of the price rise.
Fitchburg, Dorchester, and New Bedford lead the trend to strong appreciation. More stable annual appreciation from 12% to 16% is seen in Brockton, Haverhill, Lowell, and Worcester.