U.S. Northeast Market Studies

Client

U. S. Department of Housing & Urban Development

Skills

Appraisal, Market Study – Affordable Housing

Project Description

Clarendon was awarded a contract with the U. S. Department of Housing and Urban Development (HUD) to provide Section 8 Rent Comparability Studies for the Northeast Region of the United States. The region is based in New York City and includes the following 14 states: Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, Virginia and West Virginia.

Section 8 laws and administrative procedures require HUD to obtain and review Rent Comparability Studies (RCS) when initially renewing most Section 8 contracts and when processing some rent increase using the Annual Adjustment Factors. The market rents resulting from these studies determine the rents owners can receive and, hence greatly influence whether an owner will renew and continue providing assisted housing or opt-out of the Section 8 contract and convert to unassisted, market rent housing. The market rents set in these studies also drive HUD’s outlays for Section 8 project-based subsidy.

Market Overview

The major markets covered include the New York Metropolitan Area and the Boston Metropolitan Area. The New York Metropolitan Area is ethnically and geographically diverse, including the largest city in the United States – New York City. The regional economy is the largest in the country and one of the most important in the world. Finance, international trade, media, real estate, manufacturing, tourism, biotechnology, and education are leading industries. Other industries include entertainment and news media. Along with its wealth, the area has a cost of living that is among the highest in the United States.

New York is one of the premier apartment markets in the country, featuring some of the highest rents and boasting an extremely affluent tenant base. The outer boroughs of the Bronx, Brooklyn, and Queens, traditionally more working class, have seen their rents rise in upturns as rising Manhattan rents drive even fairly upscale tenants to consider alternative locations.

The Boston Metropolitan Area is the most intensively developed section of the State as well as the most populated area in New England. The Boston metropolitan area consists of 92 municipalities covering over 1,000 square miles in Eastern Massachusetts. In the New England Region historic employment growth in health care, information, communications and a range of business and professional services fueled the demand for housing goods and services.

The Boston apartment market is one of the top markets in the country, comprised of several geographic sub markets from Downtown Boston, Boston neighborhoods, Western suburbs to the South Shore. During the current cycle, all markets have generally experienced high rent growth, low vacancies and the resulting increases in competitive supply.