Traditionally, monthly rent prices start to trend up in the early spring for new leases, peak in the summer, and then cool off in the fall and winter. The coronavirus pandemic, which started to trigger shelter-in-place orders across the United States in mid-March, has affected that dynamic, according to a new analysis from Apartment List.
Median rents declined nationally from March 2020 to April 2020 for the first time since 2014, the earliest year for which data is available.
Month-to-month shifts are a good way of evaluating Covid-19's immediate impact on the market, according to Christopher Salviati, a housing economist at Apartment List and author of the report.
To see how the pandemic has influenced rents, Grow looked at month-to-month rent growth for two-bedroom apartments in America's 50 largest cities based on Apartment List's data. We then took the change between March and April 2020 — normally a period that sees a seasonal increase — and compared it to the same time last year.
These 10 cities have seen the biggest price drop-offs this spring for two-bedroom rentals, indicating that their rental markets have slowed the most substantially, at least for now.
Salviati thinks the two primary factors affecting rent growth are the way these local economies are susceptible to damage from coronavirus-related restrictions, and also the effects of the coronavirus itself as a public health emergency.
In other words, many of these other cities have been hard hit either by the coronavirus directly or by the lockdown orders that are trying to address it.
New York is the most visited city in the Americas, according to a report from Euromonitor International, and it has a diversified economy. It's also the pandemic's current global epicenter.
Miami is among the nation's top four tourist destinations. Nashville's tourism sector was also growing rapidly before the pandemic. Las Vegas is one of the most tourism-dependent cities in the country: One in three Nevada jobs is in the hospitality and gambling industry. Shutdowns in Las Vegas have ripple effects that can be felt in nearby communities such as Henderson, Nevada.
Many tourism, entertainment, and hospitality jobs cannot be done from home. Las Vegas, Orlando, Miami, and Oklahoma City have some of the highest proportions of non-essential employees who are unable to work remotely, according to another Apartment List report. Those workers are at very high risk of losing their sources of income and therefore their ability to pay rent.
Video by David Fang
The effect of the pandemic on rent prices hasn't been dramatic: Rents in many cities have flattened when they normally would be trending up. But there hasn't been a massive collapse in prices, either.
"This pandemic is both hurting demand, vis a vis creating unemployment. But it's also limiting new supply — the turnover supply — because people are required to stay in their home," says Michael Neal, a senior research associate at the Urban Institute's Housing Finance Policy Center.
People across the country, and especially in many of these cities, are losing their jobs and their income, and with it their ability to pay rent. That dynamic — in addition to the various eviction moratoriums in place nationwide — has discouraged people from moving, reducing the number vacant apartments.
StreetEasy's first quarter report for New York City's real estate market found that new rental listings dropped 52% in the second half of March when compared to the first half.
Supply and demand, and the effects that come with each of them, are largely canceling each other out, leaving local rental markets in a sort of holding pattern.
What will happen in the future is less clear, since no one knows for sure how the pandemic will play out over the next few months or what the economy will look like on the other side of it. Landlords and tenants alike seem to be operating with this in mind, according to Salviati.
"A lot of folks might not really want to even think about the the possibility of moving or dealing with that hassle right now," says Saviati. "If they're more inclined to just renew their current lease, then it may be the case that even though there's less people moving, there actually isn't necessarily a higher vacancy rate that landlords are facing."
As for landlords, he says a lot of them "might be just simply waiting until things settle down to get a clearer picture of what happens before they make any kind of serious decisions about pricing."
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