Landlords are offering concessions as the city’s rental market softens – a trend that’s impacting the city’s housing and mortgage outlooks
Boston’s once-ferocious rental market — long a beacon of buoyant demand — is showing signs of softening in 2025. In the city’s more desirable post-university and biotech-adjacent neighborhoods, landlords are increasingly offering rent reductions and concessions rather than raising rates.
For much of the past decade, rental prices and competition among renters surged, underpinned by demand from universities, biotech firms, and an influx of young professionals. As recently as 2022, tenants competed fiercely, enabling landlords to maintain steep rents.
Over the last 12–18 months, however, a confluence of factors has eroded that demand. Cuts to biotech research funding have weakened a key employment base. Some residents have relocated to states with lower costs of living. Overall economic uncertainty has tempered appetite for high-priced rentals.
As a result, landlords — especially in high-end and student-heavy areas — are being advised to “cut rents… fast,” according to market observers.
"There has definitely been a noticeable slowdown in rental activity and more vacancies this year. I’ve noticed that as well. Rent prices did surge and landlords have been slow to adjust down as demand has reduced," Shant Banosian (pictured top), the Massachusetts-based president of Guaranteed Rate, told Mortgage Professional America.
Implications for mortgage professionals
For mortgage brokers, lenders, and portfolio managers with exposure to Boston’s residential market, this softening could have several important consequences.
- Reduced rental income reliability. Properties previously expected to yield strong rents may now generate lower cash flow or sit vacant, increasing the risk of loan default or negative cash-flow scenarios — particularly for landlords with tight debt-servicing margins.
- Pressure on rental-backed valuations. Valuation models that assume robust rental growth may need revisiting. Weaker demand and downward rent movement could erode the value of buy-to-let portfolios or second-home investments.
- Potential refinancing stress. Borrowers counting on strong rents to support mortgage payments may struggle when leases renew under more subdued market conditions. Underwriting standards may need tightening, particularly around rent-to-debt-service ratios.
- Shifting borrower profiles. As some tenants move out or seek lower-cost alternatives, demand may shift toward smaller, more affordable units or to suburbs — which may impact which segments of the housing stock remain attractive to lenders.
What’s changed — and what hasn’t
It’s important to stress that Boston has not plunged into a full-blown rental collapse. The adjustments are more subtle: some rents are falling, incentives are emerging, but many buildings remain broadly occupied.
Recent rental-market surveys focused on the earlier part of 2025 still reported relatively steady demand and limited concessions — especially outside the most affected neighborhoods. The market is shifting from a landlords’ market to something more balanced, perhaps even favoring tenants in certain segments.
"In terms of the mortgage environment, interestingly enough, we haven’t seen a noticeable slowdown in investors’ appetite for rental properties. They’ve still remained strong,” Banosian said.
“The percentage of rentals and investors buying real estate has remained very consistent over this time... So there’s a disconnect between the actual rental market itself and investors’ appetite. Investor appetite for rental real estate is still very strong, even though renters’ appetite for housing supply has slowed down a little bit.”
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
