Since the start of the crisis, rent prices in various cities around the nation have started to decline. Why are rent prices declining when more and more people are losing their jobs and unable to pay?
The rent price drops haven’t been dramatic, but the drops are tied closely to lack of demand. When people are out of work, they cannot afford to pay rent or look for a new rental. Also, fewer people are moving into these cities from out of state and looking to rent a place. With a pandemic putting pressure on every city, who is moving right now?
Rent isn’t necessarily dropping in every city profoundly affected by COVID-19. In some places, it is merely stagnant. When fewer people are moving around, there is both less demand and less supply of apartments, which puts the entire rental real estate market into a holding pattern.
However, there is a small but steady decline in rent cost in many cities, which is encouraging for people who want or need to move despite the pandemic.
Miami, Florida: -1.09%
New York, New York: -.099%
Baltimore, Maryland: -0.94%
Austin, Texas: -0.90%
Las Vegas, Nevada: -0.86%
Nashville, Tennessee: -0.81%
Charlotte, North Carolina: -0.79%
Houston, Texas: -0.78%
Oklahoma City, Oklahoma: -0.75%
San Antonio, Texas: -0.75%
As an example of lower rent prices and what that means for you, if you were interested in moving to New York, New York, you can expect decreased rent prices compared to the beginning of 2020. On the rental listing website Localize.city, New York City rent prices decreased for 70% of the listed apartments compared to before the Governor of New York enacted stay-at-home orders.
The price decreases are affecting all five boroughs, according to Localize.city data.
After several years of growth in the Austin area, rent prices are significantly dropping, and leasing activity overall is coming to a grinding halt amid the continuing crisis. Most of Austin's rent prices dropped by an average of $8 in April 2020 compared to April 2019. Factored into the decreases are the concessions property managers and landlords are making to encourage and attract new leases. A typical discount in the area is one or more free months’ rent.
The comparison of new leases to new vacancies is falling, further suggesting that people are reluctant to move during the pandemic and are opting to stay put and ride out the storm. With fewer people looking for a new lease and a decrease in people leaving their current leases, Austin is experiencing a stagnant rental market that is bad for landlords might be good for those rare people who need a new apartment right now.
While not everyone is willing to move during the COVID-19 storm, if you were already planning a move before March 2020, you might still consider doing it once things start to settle. You don’t want to miss out on the falling prices and added concessions, but you should balance your desire to save money with your need to stay safe.
Fewer people are moving from state to state or even into neighboring cities, which is opening up excellent opportunities for people who feel safe enough to take advantage of lower prices and concessions like a month of free rent. Rent prices are also affected by the sheer number of people working remotely. If you don’t need to travel or commute to work, why would you move closer?
Most analysts don’t expect rent prices to start skyrocketing when the pandemic dies down. Prices are more likely to stagnate than dramatically rise. If you’re prepared to move to a new city, consider doing it now to get into a nicer apartment or single-family home for less money.