The cost of housing has grown dramatically in Somerville over the past decade. While the pandemic has decreased the average rent price by a slight margin in Somerville, median home sale prices have continued to climb in the past two years thanks to low interest rates and a shortage of single family homes in Boston. As a result, it’s becoming difficult for home buyers to justify the expense of ownership compared to renting Somerville apartments.
The current 1 year median sales price for single family homes for sale in Somerville is $993,681. That’s more than $200K higher than the median price for single family homes in Boston ($773K). If you were to finance that median sales price with a standard 30 year loan (30% down, .3% APR), that would mean the monthly cost of a single family home in Somerville would equal $3,900 including property taxes and homeowner’s insurance. Compared to the current average rent price for apartments in Somerville ($2,459), it would cost you an additional $1,441 to own a single family home in Somerville rather than renting an apartment.
The 1 year median price of condos for sale in Somerville MA is $823,914, roughly $125K north of Boston’s median condo price ($699K). Applying the same math as above to the median condo price, and factoring in an addition $300 per month to account for the average condo HOA fee, we can estimate that the average condo owner in Somerville pays $3,554 per month for mortgage, taxes, insurance and maintenance. While slightly less than the single family monthly cost of ownership, it still costs a Somerville condo owner $1,096 more per month in housing costs compared to renting an apartment.
If we apply the same rent vs. buy equation for different property sizes, we find a sliver of hope for aspiring Somerville home buyers. Somerville’s 1 year median sale price for studio properties is surprisingly low at $132,000, and the 1 bedroom median sale price in Somerville is still under the Boston median at $533K. This would actually benefit the homeowner financially to own a studio property in Somerville by $1,329/month on average. Also, owning 1 bedroom nearly breaks even with renting a 1 bedroom apartment in Somerville, with the owner spending only $151 more monthly on average.
For larger properties, the monthly cost of renting is significantly less than owning by $561 for 2 bedrooms, $997 for 3 bedrooms, $600 for 4 bedrooms, and $410 for 5 bedrooms and larger. |
