According to the latest Census data, the number of newcomers to the five counties that comprise the Boston region has dropped for the third straight year in 2016. While the region did still see 25,000 newcomers in the last year, that figure is down by nearly half when compared to 2013. As such, population growth in the region is slowing and, in fact, the data indicates that the population would likely be shrinking if not for newcomers from outside of the United States.
A Region Boosted by Immigrants
Over the past several years, the population growth in Boston has been mostly driven by immigrants. In 2015, the region would have lost population if not for arrivals from outside of the country. Instead, the region gained nearly twice as many residents from immigrants as it lost from domestic moves. Furthermore, within Boston proper, the number of foreign-born residents increased by nearly 20 percent from 2000 to 2014, bringing the immigrant population in the United States to 27 percent of the city’s population.
Despite the boost the region’s population is receiving from immigrants, the overall population growth is slowing significantly. According to the latest Census data, the number of newcomers fell for the third straight year in 2016.
Population and Housing Costs
With population growth declining in the Boston region, it may seem logical to assume that housing prices will start to fall. After all, housing prices generally go up due to demand and fall when the demand is not so great. With fewer people settling in the Boston region, it may seem reasonable to assume that this would reduce the demand and, therefore, result in lower housing prices. While this may seem like a logical conclusion to draw, the reality is that there is already too little housing available to address the needs of Boston’s population. As such, even if there was no population growth, there would not be enough housing available in the Boston region to meet the demand.
The unfortunate reality for those who live in Boston is that the cost of housing in Boston is significantly higher than most other parts of the country and no relief is likely to be seen in the near future. In fact, Boston ranks third in the country behind San Francisco and New York when it comes to renting a one-bedroom apartment. In March, the median rental cost of a one-bedroom apartment was $2,250, while the median rent for a two-bedroom apartment was $2,600.
To address these concerns, a number of new apartments and condos are in development throughout the city. Nonetheless, the number of new condos and apartments planned for the market will still fall short of meeting demand. In addition, the supply of homes for sale in the inner suburbs is historically low. Put all of the pieces of this puzzle together and it is clear to see that prices are not likely to come down in response to slowed population growth for the simple reason that demand for housing is not likely to decrease in the near future.