Middlesex County, MA Cap Rates by Neighborhood

County-Wide Gross Yield: A Floor, Not a Target

The county-wide gross yield of 4.73% is the number you start with and immediately set aside. It is computed from a $830,629 median home price against $3,272/month median rent, and it blends Cambridge condos at $1.1 million with workforce rentals in Maynard in a single average that describes no actual deal well.

What the aggregate does tell you: Middlesex County is an appreciation market by construction. At 4.73% gross, you are negative before debt service at any conventional loan-to-value ratio, before taxes averaging $11,308 per year, and before maintenance or management. The investors who have made money here did not make it on cash flow; they made it on 5.91% price appreciation from 2023 to 2024 and a structurally undersupplied rental market backed by 920,400 jobs paying $2,066 per week on average.

The spread between submarkets is where the investment decision actually lives.

Property Tax: The Single Largest Drag on Net Yield

Before comparing neighborhoods, anchor the tax math. The county average residential rate is $12.42 per $1,000 of assessed value, producing an $11,308 average annual tax bill on the $830,629 median home.

That $11,308 converts to $943 per month, or 28.8% of the $3,272 median monthly rent. Applied to a gross yield of 4.73%, the tax load alone strips out about 1.36 percentage points (the annualized tax of $11,308 divided by the $830,629 acquisition price), leaving a pre-insurance, pre-expense net yield in the range of 3.37%.

Tax rates vary enough within the county to move that calculus by 100 basis points or more:

• Cambridge: $6.67/$1,000. On a $1,108,000 condo, annual taxes run about $7,390, or roughly 0.67% of acquisition cost. That is the most tax-efficient entry point in the county in rate terms, even if the absolute price is the highest.
• Maynard and Stow: $16.62–$17.87/$1,000. At those rates, a property at the county median price carries a tax bill of $13,800–$14,840. Tax cost as a percentage of acquisition reaches 1.66–1.79%, compressing net yields by a full percentage point relative to Cambridge on a rate-adjusted basis.
• North-of-Boston suburbs (broad): Most communities saw residential rates decrease over the last five years as rising assessed values allowed the same tax levy to spread across a higher base. That is temporary relief; as assessments catch up to market values, nominal bills will climb back.

The practical rule: in any Middlesex County underwrite, tax as a percentage of purchase price should be modeled explicitly by municipality, not by the county average.

Neighborhood-Level Yield Analysis

Cambridge

Entry prices are the highest in the county: $1,108,000 average for condominiums, $2,550,000 for single-family homes. At $3,272 county median rent (Cambridge rents are above the county median, but neighborhood-level ZORI is not available here), a $1,108,000 condo purchase implies a gross yield below 3.5%, likely in the 3.2–3.4% range for typical 1-bedroom product. Condo prices for 1-bedroom units have come down nearly $100,000 due to Kendall Square biotech softening, which creates a marginal improvement in yield for buyers entering now, but the submarket remains the lowest-yielding in the county.

Cambridge's low $6.67/$1,000 tax rate partially offsets the yield compression. Tax cost is about 0.67% of acquisition versus the county average of 1.36%. The net yield gap between Cambridge and a higher-tax suburb is smaller than gross yields suggest.

The biotech concentration is a real underwriting risk. Kendall Square tenant demand is tied directly to life sciences hiring cycles, and the 2025 pullback in biotech hiring has already moved condo prices. Investors underwriting Cambridge for rent growth should stress-test a scenario where life sciences employment stagnates for 24–36 months.

Somerville

Somerville is the county's most supply-constrained submarket by the available data. Median home price reached $998,000 in December 2025, up about 12.5% in the prior 12 months. Rental vacancy sat at 0.38% in mid-2025, with apartments renting in a median of 14 days.

At $998,000 median and county median rent of $3,272 as a proxy, gross yield is about 3.93%. That is still below the county average because Somerville prices ran faster than rents over the measurement period. However, the 0.38% vacancy rate and 14-day absorption mean landlords face near-zero carrying cost between tenancies, which has real NOI value that a static cap rate calculation does not capture.

The Green Line Extension is a permanent supply-side catalyst here. The GLX brought 85% of Somerville residents within walking distance of rapid transit, up from 15%, and opened 192 acres near Union Square for transit-oriented redevelopment. That pipeline introduces future supply competition for existing multifamily owners; the current vacancy tightness will not persist indefinitely once entitled projects deliver.

The November 2025 nine-day GLX service suspension for signal upgrades is a short-term nuisance, not a structural issue. If the Train Protection System installation improves long-term GLX reliability, the transit premium for Somerville rentals strengthens. If reliability remains poor, the premium is at risk.

Cambridge Overflow: Medford and Arlington

The brief does not provide granular cap rate data for Medford or Arlington, but the directional dynamic is clear: Cambridge average condo prices of $1,108,000 push renter demand into adjacent submarkets where investors can capture the same tenant pool at a lower basis. Medford gains directly from the GLX, sharing the same new transit access as Somerville at presumably lower price points. This is where a buyer who cannot underwrite a Cambridge or Somerville purchase can access a comparable tenant profile.

Newton and Lexington

Newton recorded 189 high-end sales in Q1–Q3 2025, up from 162 the prior year. High-end inventory county-wide hit a record 450 listings, with 677 total high-end sales, up 18% year-over-year. These are owner-occupier markets, not investor markets in any yield-focused sense. A single-family home in Newton at $2,000,000+ implies gross yields below 2.5% at any realistic rent. These submarkets matter for investors as an indicator of wealth inflows that set a floor under price levels in adjacent rental markets.

Neighborhood Comparison Table

Cap Rate Compression vs. Decompression

County-wide home prices rose 1.10% year-over-year as of June 2026, a sharp deceleration from the 5.91% gain from 2023 to 2024. Multifamily asking rents rose from about $2,300 to about $2,800 between 2020 and 2025, with slight softening beginning in mid-2025.

The pattern: rents and prices both plateaued in 2025, but rents softened first. That combination is mild cap rate expansion at the margin. The $1.1 billion in year-to-date multifamily transaction volume confirms institutional buyers are still clearing the market at current yields, which caps how far cap rates can expand in the short term. Pricing power sits with sellers of stabilized suburban assets near employment centers; buyers negotiating lease-up or value-add deals have more room.

Flood Insurance: A Yield Adjustment That Varies by Parcel

FEMA's July 2025 map updates for the Charles, Nashua, and Merrimack watersheds added properties in Peabody and other county communities to special flood hazard areas. Mandatory flood insurance now applies to those parcels for federally backed mortgages.

The broader risk: First Street's modeling identifies 42,447 flood-risk properties in the county versus 9,093 under official FEMA maps, a 4.7x gap. Separately, 17% of county properties face severe flood risk over a 30-year horizon by First Street's estimates. Annual flood insurance premiums for newly mapped SFHA properties can run $1,500–$4,000+ depending on structure type and elevation, reducing net yield by 18–48 basis points on a $1,000,000 property. Conduct a property-level FIRM lookup before signing a purchase and sale agreement.

Cap Rate Outlook

The structural case for flat-to-modest cap rate compression over a 3–5 year horizon rests on two durable facts: a state-acknowledged 200,000-unit housing shortage and a 920,400-worker employment base in knowledge-economy sectors. Neither resolves quickly.

The case for cap rate stability or modest expansion rests on the MBTA Communities Act pipeline. Final regulations issued April 14, 2025 require multifamily as-of-right zoning near transit across most county municipalities. As entitled projects move through permitting and into delivery, vacancy in the tightest submarkets (Somerville, Medford) will face upward pressure. The ADU law adding supply in every town is a secondary factor with a slower delivery curve.

Biotech employment in Cambridge is the primary wild card. If Kendall Square hiring recovers, Cambridge condo prices firm and spreads compress. If the pullback deepens, Cambridge yields improve marginally for buyers.

For practical underwriting: model a 3.0–4.0% net cap rate on well-located Somerville or Medford multifamily, stress-test the tax line by municipality, and run a flood-risk check at the parcel level before finalizing acquisition costs.

Model your specific deal with our investment property calculator to layer in the actual tax rate, insurance load, and debt terms for your target submarket.