Summer 2020 Bringing Shift To Big City Rent Prices
Rent typically increases during spring and summer. But this year, that’s not happening, according to Yahoo Finance.
With many landlords worried about widespread nonpayment in April rent because of the tens of millions of Americans experiencing a disruption to their income during the pandemic, they kept current prices the same rather than raise them during this time.
California rental listing platform Zumper found that around the country, one- and two-bedroom apartments were 0.5% cheaper this year compared to the same period last year, after 0% increases in May and marginal growth in April.
Chris Salviati, a housing economist for San Francisco rental platform Apartment List, told Yahoo Finance, “Late spring and summer months are the busy season for apartment hunting, so usually some of the fastest rent growth is this time of year. But compared to last year… rent growth is certainly lower than what we’ve seen at this time of year.”
As shutdowns across the country are gradually easing, some predict that suppressed demand will cause a brief boost to regular seasonal prices. However, with unemployment still a major problem throughout the US, demand will slow and would-be renters will postpone plans to move to pricier apartments.
Salviati observed, “Now, folks can move, if that’s something they still want to do, but they are facing unprecedented financial hardship. So that is disincentivizing moving or downgrading moves [to less expensive apartments].”
Areas where rent fell the sharpest included places infamous for sky-high prices, like San Francisco, New York City, Boston, and San Jose. Correspondingly, these cities experienced considerable unemployment.
Selma Hepp, CoreLogic’s chief economist, said, “The largest declines are in areas with the most increased unemployment. Now, landlords can’t get the same rent prices they were getting before.”
The price cuts in metro areas are obvious. In June, the average rent for a one-bedroom apartment in San Francisco shrunk 9.2% to $3,260 — the lowest in over three years, Zumper noted.
Rad Dillman, the chief economist at real estate investment, development, and management firm Cortland, told Yahoo Finance that an acquaintance’s landlord in New York City offered a 15% discount.
However, Zumper found that in smaller areas like Baltimore, Spokane, Tampa, and Arlington, rent prices increased between 3% and 5%. The platform’s CEO, Anthemos Georgiades, told reporters, “The pandemic is shifting the demand away from the most expensive markets, as the majority of rents in these top cities were on a downward trajectory.”
Affordable apartments, which cost less than one-third of the average local income, were highly sought after prior to the outbreak. Demand sent prices climbing, and now more people are hunting for affordable places to live. Apartment List data found that one-third of renters intending to move because of the pandemic want something more affordable.
This competition could make affordable housing even more difficult to come by. Salviati predicts that the current situation will lead to pricier low-end apartments and cheaper high-end ones. “Right now, the financial factor is the biggest thing at play [when deciding whether to move]. So for the rental market, the price effects of the pandemic will vary by segment of the market [low- or high-end].”
- Paynter, Sarah. “Rent Is Getting Cheaper in Big Cities.” Yahoo! Finance, Yahoo!, 24 June 2020, finance.yahoo.com/news/rent-is-getting-cheaper-in-big-cities-105433362.html.