Cost of Living in Boston, MA: Renting vs. Owning a Home in Boston

Row of new construction homes near Boston, Massachusetts
Row of new construction homes near Boston, Massachusetts

Boston is known for its world-class education, thriving job market, and dynamic culture. These factors contribute to a high demand for housing, which, in turn, drives up the cost of living. If you’re considering a move to the City of Champions, weighing your options when deciding whether to rent vs. own a home is essential.

In this blog post, we’ll discuss the advantages and disadvantages of each option, outline key expenses to consider, explore salaries, and more to help you understand the average cost of living in Boston, MA.

 

Summary:

  • Cost of Living in Boston: Renting vs. Owning
    • Average Cost of Rent in Boston
    • Average Cost of a New Construction Home in Boston
    • Pros & Cons of Renting in Boston
    • Pros & Cons of Owning a Home in Boston
  • Average Cost to Build a New Home in Boston by Neighborhood
  • Average Cost of Groceries/Utilities in Boston
  • Average Salary in Boston
  • Tax Benefits for Homeowners in Boston

 

Cost of Living in Boston: Renting vs. Owning

Average Cost of Rent in Boston

First, let's take a look at typical rent expenses in Boston. According to RentCafe® in 2023, the average monthly rent for an apartment in Boston is around $3,970. Prices vary depending on the neighborhood, such as the North End, Back Bay, or Seaport area. It’s also important to note that rental rates decrease the further you get out of the city and into the suburbs. For example, the average rent in Woburn (ten miles away) is $2,650. That’s a big difference!

 

Average Cost of a New Construction Home in Boston

The average cost of a new construction home in Boston is relatively high, reflecting the city's status as one of the most expensive housing markets in the United States. Like the rental market, newly constructed home prices in Greater Boston decrease as you move farther away from the city. Newhomesource.com shows custom-built homes in Boston could cost anywhere from $700,000 to over $4M in 2023, depending on the neighborhood, property size, and amenities offered. Pulte new construction homes in the Boston area start in the $300Ks.

To estimate the cost of living in Boston each month, consider thoroughly researching which Boston Metro city is best for you, then examining prices in that area.

 

Pros & Cons of Renting in Boston

There are both pros and cons of renting in the Boston area. One of the most appealing factors of renting is its flexibility, making it easier to relocate if job opportunities arise or your personal circumstances change. On the other hand, Boston’s rental market can be highly competitive, leading to frequent rent increases that can strain your budget.

Pros

  • Less upfront financial commitment: Generally, renting requires a lower upfront cost than buying a home, making it more accessible, especially for individuals or families with limited savings.
  • Flexibility and mobility: Renting gives you flexibility. If you need to move for work or personal reasons, it's usually easier to end a lease agreement than to sell a home.
  • Amenities and maintenance: Many rental properties, especially in apartment complexes, offer amenities like gyms, pools, and maintenance services that might otherwise be costly for homeowners.

Cons

  • Lack of equity: When you rent, you essentially pay someone else's mortgage and any equity that builds up belongs to them.
  • Limited control: Renters have limited control over the property. Major decisions, such as renovations or even minor changes, often require the landlord's approval.
  • Rent increases: Landlords can increase rent prices, which might lead to financial strain, especially if your income doesn't rise proportionally. A recent report on Apartmentlist.com found that nine months into 2023, Boston rents rose 8.7%.

 

Pros & Cons of Owning a Home in Boston

For homeowners, the advantages of owning a home include the chance to build equity and possibilities for customization. Some drawbacks of buying your new home could be potential market risks and a significant financial commitment.

Pros

  • Chance at equity building: There’s a chance that, over time, your home might appreciate in value, allowing you to build equity.
  • Customization: Homeowners can customize and renovate their homes according to their preferences, something not often allowed in rental properties.
  • Tax benefits: Homeowners may qualify for tax deductions on mortgage interest and property taxes, potentially reducing their overall tax burden.

Cons

  • Financial commitment: There are significant upfront financial costs when buying a home. That includes the down payment, closing costs, and ongoing maintenance expenses.
  • Market risks: The real estate market can fluctuate. If property values decline, homeowners might find themselves owing more than the home is worth, especially if they purchased with a small down payment.
  • Maintenance responsibilities: Homeowners are responsible for all maintenance and repair costs, which can sometimes be substantial, depending on the age and condition of the property.
Exterior of new construction home near Boston, MA
Exterior of new construction home near Boston, MA

Average Cost to Build a New Home in Boston by Neighborhood

For comparison, we’ve gathered new construction data for condominium listings from the Massachusetts Multiple Listing Service (MLS) in the same towns above, as of 2023. These monthly mortgage calculations are estimated using a 30-year fixed-rate mortgage with a 20% down payment and 7.77% interest rate. Additional costs may include private mortgage insurance (PMI), property taxes, home insurance, and HOA fees.

 

Average Cost of Groceries/Utilities in Boston

General Boston living expenses, such as groceries and utilities, tend to be higher than the national average. A typical household in the Boston area can expect to spend a moderate to high amount on groceries, especially if they prefer organic or specialty foods. The city and its surrounding suburbs offer a range of grocery stores, from budget-friendly options to high-end markets, catering to various budgets and preferences.

For groceries, a family of four can expect to spend anywhere from $600 to $1000 per month, depending on dietary choices, eating habits, and family size.

Utilities, including electricity, heating, cooling, water, and garbage, average $250 to $500+ per month, although this can vary significantly based on the season and energy usage habits.

These living costs in Boston, Massachusetts, are rough estimates from Zumper as of October 2023. Actual prices may be higher or lower based on household size, energy efficiency, lifestyle choices, and location within the Boston metropolitan area.

 

Average Salary in Boston

Boston boasts a diverse economy and serves sectors like technology, health care, finance, education, and biotechnology. Boston tends to offer higher salaries on average, compared to the national average, due to its high cost of living. According to ZipRecruiter®, as of October 2023, Boston residents average $80,579 annually compared to the national average of $59,428. Most salaries in Boston range between $62,798 (25th percentile) to $97,272 (75th percentile) annually.

Of course, salaries vary depending on your occupation, experience, and other factors.

 

Tax Benefits for Homeowners in Boston

Homeownership in the United States, including Boston, can offer several tax benefits that can help homeowners save money. Some common tax benefits for homeowners include mortgage interest deductions, property tax deductions, home equity loan interest deductions, capital gains exclusions, and energy efficiency tax credits. These deductions and credits can result in substantial tax savings over time.

Exterior of new construction home in Boston, MA
Exterior of new construction home in Boston, MA

Conclusion

The decision to rent or buy in the Boston area comes down to your individual preferences, financial stability, and long-term goals. Renting offers flexibility and lower upfront costs but lacks the potential of homeownership. Buying a home provides stability and potential tax benefits but demands a significant financial commitment and ongoing maintenance costs. Creating a detailed budget is essential for navigating the high cost of living in Boston, and choosing a neighborhood should come with careful research.

Though the cost of living in Boston suburbs and downtown area can be high for renters and homeowners, the city is renowned for its rich history, vibrant culture, and diverse neighborhoods, making it an exciting place to live.

Explore new construction homes in Boston, MA, today or browse more Pulte blogs.

Written By: Emily Johnson, New England native, former Boston resident, and Marketing Manager of Pulte Homes New England Division

Last Updated: 7/1/24