Harvard’s reputation is so great that it can reject 19 out of 20 applicants. But those who get in look forward to having a degree from a world-class organization. Roughly twenty thousand students currently attend the prestigious school. Their presence has a massive impact on the local real estate market. Let’s take a look at the residential neighborhood near Harvard.
How Harvard’s Economics Affect the Local Real Estate Market
Harvard is part of the Ivy League. These are colleges and universities with global brand recognition. That is one reason why they can charge insane tuition rates even as other colleges go under. The demand for the branded degree is so high that they can set it at whatever they like. And all of those students need to live somewhere. This results in a student body often willing and able to pay far more for housing than students in other college towns.
The average rent for a one-bedroom apartment near Harvard is around two thousand dollars a month. Rent for a two-bedroom apartment is around three thousand dollars a month. This makes rentals near Harvard as expensive as Los Angeles and Washington DC and on par with downtown Boston. Note that you’ll pay a lot less in Boston neighborhoods well away from downtown.
How Location Affects Rental Rates
In most rental markets, you pay a premium to be close to shopping centers, major parks, and public transit hubs. That is as true of the Boston metro area as anywhere else. Another factor affecting college towns and neighborhoods geared toward students is proximity to the university. You’ll pay far more for homes near Harvard University that let you walk or bike to class in less than thirty minutes than an apartment or house that forces you to commute for an hour each way. This is why three-bedroom condos near Harvard often cost three million dollars or more. Unfortunately, this explains why most faculty live in near suburbs and commute in. Note that many students do this, too.
How the Student Population Affects Property Availability
Roughly forty percent of Boston residents rent an apartment or house. Students almost always rent rather than buy real estate. This is why two thirds of Cambridge residents are renters. Yet it also prevents the housing market from going insane the way Big Tech has skewed the northern California real estate market. The average home in Cambridge, Massachusetts costs around a million dollars. That is only 300K more than the average home in the greater Boston metro area.
One of the interesting side effects of the large rental market is that mansions with six and ten bedrooms are bid up, so that the rooms can be rented out to students. For example, an eight-bedroom home with 7000 square feet costs eight to nine million dollars, whereas a traditional four bedroom single family home could cost two million dollars. And a two-bedroom condo near the college costs 700,000 dollars or more, as much as a 1400 square foot home in Boston proper.