BOSTON-Apartment rents in Greater Boston fell by more than 10% last year, bucking a national trend and putting the city at the bottom of 59 major metropolitan apartment rental markets, a study by Harvard's Joint Center for Housing Studies has found.

A shift to condos combined with still weak job growth helped fuel the downward spiral and ran counter to an emerging nationwide trend toward rent stabilization. "With conditions still favoring homeownership and lingering weakness in many sectors of the labor market, demand for rental housing remained soft in 2004,'' the Harvard report states.

Nicolas Retsinas, director of Harvard's Joint Center for Housing Studies, tells GlobeSt.com that low interest rates are a major factor in the rent decline as tenants look to buy in order to head off both rising home prices and rent increases. "With historically low interest rates, people are anxious and eager to buy a home," Retsinas says. "They don't want to be left off the carousel as it goes around. They feel if they do, they won't be able to get back on."

Yet despite a booming housing market throughout most of the country, the Harvard report found potential pitfalls, including increasing affordability problems and the access to easy housing credit.About half of all mortgages today are comprised of risky interest-only or adjustable rate loans that can pose potential problems for overstretched buyers should the lackluster economy grow even worse, the study adds. "We've had an astounding housing market in its 13th year of record prosperity but not withstanding its record prosperity, there are also risks," Retsinas notes.

The annual Harvard study on the strength of the nation's housing market also found that while housing sales, rental investment and house prices all set records in 2004, the strongest price appreciation since 1979 and higher short-term interest rates were making it more difficult for first time buyers to gain a foothold in the market. As interest rates continue their upward climb and a continuing shrinkage in the region's rental market due to condo conversions, Retsinas says, prospects for the regions apartment market should improve.