Renting vs. Owning – What is Cheaper in Boston in 2023?

Table of Contents

1. A look at owning a home in Boston
2. Things to consider when owning a home [+]
   1. Home Insurance
   2. Property Taxes
   3. Utilities
   4. Misc. Costs
3. A look at renting in Boston
4. Things to consider when renting in Boston[+]
   1. Renter’s Insurance
   2. Utilities
   3. Misc. Costs
5. The cost of renting vs. owning in Boston
6. Final Thoughts

Renting vs. Owning – What is Cheaper in Boston in 2022?  The real estate market has been on a roller coaster for the past decade. There have been some years where it’s cheaper to own, and there have been other years where it is cheaper to rent a home in Boston. The overall trend lines show that owning a home is still more expensive than renting for most people. That being said, some people can still save money by buying.

A look at owning a home in Boston

Like many places around the country, the housing market has become quite competitive and expensive. The average price of a home in 2022 so far in the city is now nearly $800,000. A typical mortgage payment on a home that expensive would be close to $3,500 per month. That’s not including property taxes, insurance, and other homeownership costs.

In 2021, the average home price was around $750,000, which was a 10.5 percent increase from the previous year. Condominiums also jumped in price, however, not as aggressively increasing to $625,000, which was a 6.4 percent increase.

Over the last two years, essentially since the start of the pandemic, homes for sale in Boston, Massachusetts have increased by a whopping 28.6%.

The initial home price is just one factor to consider when purchasing a home. There are other ongoing costs that will come into play when trying to budget for overall affordability.

While for the last few years mortgage interest rates have been quite low, they are on the rise in 2022 as we make our way through the pandemic. As mortgage rates begin to slowly increase, the cost of a loan will climb, which will affect the ability many have to afford a home.

Things to consider when owning a home

There are a handful of additional costs one needs to consider when owning a home that goes above and beyond your monthly mortgage payment. And while many people may be able to afford their mortgage payment, these costs will need to be considered in order to make sure owning a home is affordable.

Some of the other ongoing costs that come with homeownership include:

Home Insurance

According to Bankrate.com, the average cost of home insurance in Boston is approximately $1,307 a year. This translates to roughly $110 a month.

Property Taxes

In Boston, the cost of your property taxes will be in direct relation to the assessed value of your home. As of now, for every $1,000 of value in your home, the tax would be $15.24. For example, if your home is valued at $625,000 the annual property tax would be roughly $9,500 or $790 a month.

Utilities

Your monthly utility costs will also depend on your home and what appliances you have. For each 1,000 sq ft of living space, the average cost is $142/mo for electricity and $90/mo for heating.

Misc. Costs

There are several additional costs that come up as well such as trash removal, snow plowing, lawn maintenance, pest control, and so on. These costs vary by home but will average around $150 a month.

Individually, these costs may not look like a lot. However, when combined, the additional costs of owning a home in Boston can range anywhere from $1,200 to $1,500 a month. This also does not take into account more expensive unexpected costs which could include anything from foundation repairs, replacement of heating and cooling units, or updating any rooms in your house.

A look at renting in Boston

For many people, the cost of a mortgage on a home is simply too high. In some cases, the interest rate can be more than what someone wants to pay, or the ability to save up enough for a downpayment just may not be possible considering the current monthly expenses. For those reasons, some people prefer to rent their living space.

Boston real estate expert Seth Williams explained that “The average price of rent for a one-bedroom (roughly 850 square feet) in Boston in 2021 was just under $3,500. The highest rates were mostly in the downtown neighborhoods like Downtown, Beacon Hill, and Back Bay.”

The cost of rent has decreased slightly from 2021, even with all the issues that have come up with regard to housing availability.

Things to consider when renting in Boston

There are a few additional costs that go into renting. Other than the actual rental price of the home, you will also be responsible for:

Renter’s Insurance

Similar to homeowners insurance, this coverage protects your belongings and provides liability protection. According to valuepenguin.com, it will cost approximately $22/month to be adequately protected.

Utilities

Since the landlord expects you to maintain your home, there are typically included utilities in the rental price. Generally speaking though, if any repairs come up while you’re living in that space that will be on your tab.

Misc. Costs

Depending on where and who one rents from, there may be additional costs involved. These could include anything from monthly parking to building amenities to trash removal.

The cost of renting vs. owning in Boston

Now that we’ve looked at all the potential costs associated with both renting and owning a home in Boston, let’s compare the two side-by-side.

Based on the information gathered, if someone rented a one-bedroom apartment in Boston, they could expect to pay $3,500 a month in rent. When all of the other associated costs are factored in, that brings the total monthly cost up to just under $4,000.

On the flip side, if someone owned a home in Boston, they could expect to pay $3,500 a month for their mortgage. With all of the other associated costs, the total monthly cost of owning a home could be closer to $5,000.

As you can see, in this scenario, it is cheaper to rent than to own, however with homeownership comes other benefits that renting does not provide.

These include the ability to build equity, take advantage of tax breaks, and the potential for the home to appreciate in value over time.

When making the decision to rent or own, it is important to factor in all of the associated costs as well as your long-term goals. If you plan on staying in one place for several years, buying a home may be the better option. However, if you are unsure about your future plans, renting could provide more flexibility.

Final Thoughts

There are advantages and disadvantages to both owning a property and renting a property. When owning a property you are responsible for everything, both messes, and financial stability. However, when renting a property there are various levels of responsibility you bear to maintain the home while also paying the landlord every month.

Renting is typically cheaper in the short term because you do not have to pay major costs like maintenance or insurance. You also have more flexibility with how you spend your money.

While owning a home can be expensive in the short term, it is almost always cheaper than renting long-term. There are both one-time costs like closing costs on purchasing a home as well as monthly payments, however, you are slowly building equity in your property.

Deciding whether to rent or own a home in Boston can be difficult. There are pros and cons to both options, and it really depends on your individual situation. If you’re trying to decide what’s best for you, make sure to weigh all the costs associated with each choice

Thank you for reading!