Introduction
Welcome to the November 2020 National Apartment List Rent Report. With the peak summer renting season behind us, we are now entering the time of year when fewer moves normally take place, causing a seasonal dip in rent prices. And although this year’s peak season was significantly disrupted due to the COVID-19 pandemic, our national index has stabilized back to a more typical trend over the past few months. Although rents fell by 0.4 percent over the past month, such a decline at this time of year is consistent with what we’ve seen in the past. However, when we look past the national figures, we find tremendous regional variation. Expensive coastal cities such as San Francisco and New York City are continuing to see rents fall rapidly, while some affordable midsize cities such as Boise have actually seen rent growth pick up steam over the course of the pandemic.
Rents dip in October in line with typical seasonality
In October, our national rent index fell by 0.4 percent month-over-month. Unlike the declines that we witnessed earlier this year during the initial stages of the pandemic, the dip that is occurring now is in line with normal seasonality in the market. For example, in 2019 and 2018, rents fell from September to October by 0.4 percent and 0.3 percent, respectively.
In fact, the changes in our national index since June look a lot like what we’ve seen in past years. From March to June, however, rents were falling at the time of year when they normally grow fastest. Because of this severe disruption to what is normally peak moving season, rents are still down 1.4 percent year-over-year, despite the recent stabilization. And although the recent trend appears to be more consistent with historical data, the underlying economic conditions are still far from normal.
While rents are down nationally, the effects of the pandemic and its implications for the rental market have varied significantly by geography. Some smaller and more-affordable markets have seen rent growth quickly spring back to life after just a brief dip in the early months of the pandemic. Meanwhile rents in some of the nation’s most expensive cities are continuing to plummet.
Since March, rents are down in 41 of the 100 largest cities in the U.S.
Of the 100 largest cities for which we have data, 41 have seen rents fall since the start of the pandemic in March. To put that in perspective, during the same months last year just five cities saw a drop in rent prices, and only two experienced a decline of more than one percent. Even in the cities where rent growth has been positive through the pandemic, it has still been sluggish. 63 of the 100 largest cities are currently registering slower year-over-year rent growth than at this time last year.
A sample of the nation’s 50 largest cities highlights the degree to which COVID-19 has disrupted the rental market this year. Just 26 of these 50 cities have seen the median rent increase since March, compared to 47 last year. And in some of the cities with the most extreme price declines, the rent growth of 2019 has been completely wiped out by the pandemic.
Despite the sluggishness compared to last year, many local rental markets appear to have stabilized fairly quickly after the dropoff in moving activity caused by the pandemic. More than half of the 100 largest cities have experienced positive rent growth since March. 47 of these cities had positive month-over-month rent growth from September to October, which is actually far more than the 22 cities that had positive month-over-month growth in October of 2019. This suggests that some parts of the country may now be experiencing the release of pent-up demand from renters who delayed moves earlier in the pandemic.
Continued declines in rent prices have generally been confined to the nation’s largest and most expensive markets, while rent growth in many small and mid-sized cities has begun to rebound. In fact, as we discuss below, some affordable mid-sized cities appear to be seeing faster rent growth amid the pandemic.
In pricey coastal superstar cities, rents are still falling fast
While rent declines in most cities have been relatively modest, a handful of major cities are experiencing significant and rapid price reductions that have yet to show any signs of stopping. San Francisco leads the pack with a decline of 21.7 percent since the start of the pandemic. The median 2-bedroom apartment in San Francisco now rents for $2,467, compared to $3,254 at this time last year. Though it remains the most expensive market in the country, San Francisco renters are now likely to find better deals than at any time in recent memory.
New York City ranks second with rents down 15.3 percent since March, and the top five is rounded out by Seattle, Boston, and San Jose, all of which have seen rents fall by more than 12 percent during the pandemic. These are all some of the most expensive markets in the country, and they all have a high share of their workforces employed by the sorts of tech companies that have been quick to embrace remote work. No longer needing to be close to the office, and with many local amenities still closed, some of these workers may be questioning their choice of location.
Furthermore, workers who have been laid off or furloughed in these cities likely have little buffer to continue affording sky-high rents. These factors have led to a softening in demand that has caused some of the sharpest rent dips on record in these cities. And the downward trend in these markets has not yet slowed - rents in San Francisco are down by 4.9 percent over just the past month, while Boston, Seattle, New York City and Washington, DC had month-over-month dips ranging from just under three percent up to as much as five percent.
In affordable midsize cities, rent growth accelerates
While the pandemic and related economic uncertainty have generally caused a slowdown in rental activity, some cities have actually seen rent growth accelerate in recent months. In Boise, rents have increased by 9.4 percent since March, more than double the 4.6 percent increase it experienced from March through October of 2019. Our rental price data is mirrored by evidence that Boise’s for-sale market has also been heating up. As the priciest cities lose some of their allure, interest in more affordable mid-sized cities appears to be picking up, potentially driven in part by renters taking advantage of remote work arrangements. As many of us continue to spend the majority of our time at home, it is unsurprising that some are now seeking out new locations where they can afford more space.
While we may be seeing the early signs of renters making housing choices independent of where their jobs are located, many of the cities with the fastest rent growth are still within commuting distance of larger job centers. For example, Greensboro, NC is within a 90 minute commute of Charlotte and Colorado Springs, CO – which lands just outside the top 10 with 5.4% growth since March – is a similar distance from Denver. And though the drives are longer, it would also be feasible to make the occasional trip from Chesapeake, VA to Washington, DC or from Reno to the Bay Area. This trend may indicate that even workers who are planning for a permanent shift toward remote work still value the option to go into the office when needed.
Conclusion
Since the start of the COVID-19 pandemic, we have seen shelter-in-place ordinances put a halt to normal moving activity, combined with staggering job losses as huge segments of the economy were put on pause. Although some laid off and furloughed workers have been brought back, the unemployment rate remains startlingly high, and the economic recovery is likely to be slow and gradual. This heightened financial hardship has led to an increase in downgrade moves as many Americans are forced to look for more affordable housing options.
At the same, there is evidence that a growing embrace of remote work will outlast the pandemic, which could significantly alter the housing choices of workers in these flexible arrangements. Amid this backdrop, we’re seeing a sharp dropoff in demand for expensive rental units in cities like San Francisco and New York, while more affordable mid-sized cities such as Boise are continuing to heat up.
For complete data, head over to our rental data page, where you can download the most recent estimates for you city, as well as historic data going back to 2017. And as always, feel free to contact us with any questions!
For more context on local data, check out our market-specific rent reports for the following cities:
To learn more about the data behind this article and what Apartment List has to offer, visit https://www.apartmentlist.com/.
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