The coronavirus pandemic changed a lot about our daily lives, but perhaps one of the most unexpected changes was the drop in rents in expensive cities.
While some people embraced remote work and left metros for less densely populated areas where they could afford more living space, urban dwellers who stuck it out in the city saw rents fall as much as 25% in some cases.
For renters, it looks like the days of discounted apartments are coming to an end. As of March, the national estimates for rentals — from studios to four-bedroom apartments — have all returned to their pre-pandemic levels, according to data from Apartment List.
The rebound in rental prices has been quick, particularly considering how long it took for them to hit bottom in 2020. Rents began dropping steadily in the spring of last year until they finally bottomed out this past December, the site's price index shows.
The recovery to pre-pandemic levels, by contrast, has only taken three months. In fact, prices increased 1.1% from February to March alone — the biggest increase Apartment List has ever recorded since it began its rent-tracking index in 2017, says Chris Salviati, an economist at Apartment List.
Part of the increase is seasonal, Salviati says: As the weather warms, more people move, and that increased demand pushes rental prices higher. However, last month's sudden price spike is probably driven by more than just seasonal demand, he adds.
"Normally, it's a couple months before we're in that peak season of rent growth," Salviati says. "So this is definitely a notable increase at the national level."
National figures only tell part of the story. Apartment List's rental index shows a bifurcation between smaller, traditionally less expensive cities like Boise, Idaho, and ultraexpensive markets like San Francisco.
Boise's rental market surged in 2020, thanks to an influx of out-of-towners who moved there during the pandemic. Rentals in Idaho's capital are now 16% higher than they were last March, according to Apartment List.
San Francisco, by contrast, saw rents plummet more than 25% during the pandemic — the biggest drop of any big city. And even though rents there have shot up quickly since hitting their low in January 2021, they still have a long way to go before bouncing back to 2019 levels, Salviati says.
Video by Helen Zhao
"Rents in San Francisco — even though they're up 3% month over month — are still down 23% year over year," Salviati says. "So, in spite of this big increase, we still have a long way to go before we get back to where rents were pre-pandemic."
That trend isn't limited to the Bay Area. Rent is at least 5% lower than it was 2019 in 13 cities with populations greater than 300,000, according to Grow's analysis of Apartment List's data.
"San Francisco, Seattle, New York, D.C., Boston — these are all places that have among the nation's highest housing costs, and over the past year, have seen rents really kind of fall off a cliff," Salviati says. "A number of these cities are seeing this reversal of the trend kind of come in pretty swiftly but, that said, we are still far behind where we were pre-pandemic."
Cities where rents fell significantly may have a lot of ground to cover before rebounding to pre-pandemic levels, but at this rate those gaps may be closed by summer, says Ori Goldman, the co-founder and CEO of Loftey, an apartment listing website in New York City.
As more people are vaccinated against Covid-19 and pandemic restrictions loosen, pent-up demand from renters who stayed away from the city during the pandemic is likely to overwhelm the already busy summer season, he says: This summer is "going to be wild for the market. It's going to be a big one."
When prices were depressed in the late fall and early winter, New York landlords took low-ball offers and enticed potential tenants with discounts that had previously been unthinkable, Goldman says. Those deals are now drying up.
"The first step of a change like that is usually when there are multiple bidders," Goldman says. "That means the owners don't have to take really bad bids anymore."
Now the New York rental market is on the cusp of the second step: price increases. "You're probably going to see a bump in pricing," Goldman says. "The prices that were really, really distressed — where they were down 30% from the highs — they're probably not going to be listed at that price anymore."
Video by Mariam Abdallah
While you may no longer be able to get a lease at the rock bottom prices listed at the end of 2020, the basic rules of apartment hunting still apply for you to get the best deal possible in your market, particularly if you need to renew your current lease.
- Do your research. You will be your best advocate in your housing hunt, so arm yourself with as much information as you can. If your lease is coming up soon, research listings in your building to check the prices for comparable units, Gerta Malaj told Grow last fall after she successfully negotiated a 30% discount on her rent when she renewed the lease on her San Francisco apartment.
- Be prepared to negotiate more than just price. If your landlord is firm on the price of your rental, look for other opportunities you can negotiate, Malaj says. You might receive a month of free rent if you sign a longer contract, for example. Be creative.
- Know that you'll need to act fast. No matter how prepared you are, time is never on your side when you're entering a hot housing market. The better you know the lay of the land, the easier it will be for you if you have to make a split-second decision.
"In the summer — a normal summer, non-Covid, non-anything — you don't even have 10 minutes to consider an apartment," Goldman says. This summer, "it's probably going to look more similar to normal than I would have thought a few months ago."
More from Grow: