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Better off renting?

Posted by Scott Van Voorhis March 1, 2013 08:54 AM

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The never-ending debate over whether it is better to buy or rent too often focuses solely on cost.

And right now, that's not much help to potential buyers across Massachusetts, especially in pricey Greater Boston. After all, housing prices never really crashed here, at least like they did in Miami, Phoenix and Las Vegas, while rents just keep going through the roof.

A better metric right now might where you can find the greater number of choices, regardless of whether you are going to pay the landlord or the bank every month.

And right now, renting is emerging as a clear winner in this regard.

Permits for apartment buildings and developments nearly doubled over the past year in Massachusetts, to 5,019, according to the U.S. Census Bureau. (The Boston Business Journal's Tom Grillo has a great post on this.)

Most are for smaller rental projects featuring five units or less, but there are also more than 200 multifamily projects out there with anywhere from half dozen to a few hundred units, all either ready to go or in construction, permits in hand, the Census numbers show.

Meanwhile, construction of single-family homes has yet to recover from the Great Recession and was actually higher in 2010, when 5,838 single-family permits were issued amid the false mini-boom triggered by the home buyer tax credit.

That's compared to 5,421 new home permits issued across Massachusetts in 2012.

Given 14,842 permits for new homes were issued in 2004, that's peanuts.

In fact, some buyers, failing to find a entry level home they won't have spending $100,000 or more fixing up, have decided to stick with renting, according to one fed-up broker I talked with yesterday who sells homes in Wellesley, Newton and Natick.

Overall, the number of homes on the market is down by more than a quarter compared with last year.

The one caveat in this whole discussion is that while multifamily building permits are up dramatically, not all of these are rentals, with some condos mixed in.

Still, rental construction is clearly leading the way. And while it has yet to bring down rents, at least there is a bit more to pick from.


This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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Scott Van Voorhis is a freelance writer who specializes in real estate and business issues.

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