The Other Green Monster: Cost of Living and Rent to Own in Boston

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The cost of living in Boston is notoriously high. How high, you ask? According to Business Insider, Boston is home to the 4th highest cost of living in the nation, behind San Francisco, New York, and Washington DC. Making it in Boston costs more than several metros that are considerably larger, as well as several more that generate a higher annual GDP. People in Massachusetts and surrounding New England states are, on average, pretty well paid, but high cost of living near the metro center can make it difficult to accumulate a substantial down payment nest egg to buy a home. And with home prices currently around five times the annual salary of the average Bostonian according to the Boston Herald, more and more people with good paying jobs are finding themselves scampering after ever-more competitive rental markets. Because of the city’s relative small size and increasing popularity, rent prices are skyrocketing and showing no sign of slowing down. All this rent money spent by young families to live somewhere with convenient access to transit and employment of course goes into the pocket of the city’s many landlords, rather than helping grow equity and build an investment. For all these reasons, rent to own homes in MA are a great way to avoid some of the pitfalls the market presents aspiring home buyers in the Boston metro.

Despite being the crown jewel of New England and one of the more historically important cities in the nation, Boston is really not all that big. Situated around the Boston Harbor, the whole city is under 90 square miles and easily fits within three or four major neighborhoods of LA. The housing stock in the city is older, fairly diverse, and includes a good number of three and four floor multifamily homes in neighborhoods like Jamaica Plain. However, in a lot of ways it lacks the massive housing complexes that give immense density to Manhattan, as well as the ability to sprawl into the countryside that is pushing development (and regulating prices) in red hot Houston. In essence, it’s more expensive to find a home in Boston because there are not that many to be bought . . . and not a whole lot of open space to build more.

For all the above reasons, eastern Massachusetts is a great environment for rent to own. If you’re unfamiliar with just how rent to own works, the basics: RTO agreements involve an aspiring buyer and a seller signing a tenant agreement with additional language that sets the terms of a sale (once the lease is completed). It offers buyers the chance to get their financial profile in order before they go to secure a mortgage loan, whether that involves savings up for a down payment, fixing credit problems, or lowering debt loads.

In housing markets driven by supply and demand, like Boston, a lease purchase agreement is a great way to lock down a home and establish a price before scarcity in housing stock drives the cost of getting a home through the roof. While establishing your credit score or saving up twenty or thirty thousand dollars takes time, locking in a price on a rent to own place stops the race against value appreciation that can make getting a mortgage loan and buying a home seem like a Sisyphean task. In all, buyers who are finding themselves just outside the housing market have a great opportunity to