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Rent Prices Falling this Summer

June 16, 2020

Apartment List Rentonomics Report

Are rent prices dropping? A report on the US rental market from Apartmentlist shows exactly what we’d expect during a pandemic. Rents are falling in most cities, but not all cities. Some rose as you can see below.

The coming months might present an uplift in rent collected and perhaps some disappointments for landlords and property management companies. Please do check out ManageCasa property management software and learn more about we can help you through the challenges ahead.

With higher tenant turnover, landlords will face challenges in finding and screening good tenants, listing their apartments for rent, staying cash flow positive against their own mounting costs and tax bills.

Bridging the Gap

And this phase of the pandemic for renters and landlords is more serious. As government shutdown checks end this summer in the US, Canada, UK, and Australia, many renters are still unemployed with past rent due. This “gap” period is one that might push a few landlords over the edge. However, everyone is hoping to cross the bridge to get to the post Corona Virus era.

Rent price trends compared. Screen capture courtesy of Apartmentlist.com

 

Rent Growth Took a Downward Turn

Apartmentlist found that national rent growth fell .2% from last month, after flattening out the previous month. As vacancies grow, we’re wondering if rents will drop much faster in June.

Normal rent growth during this part of the year, according to Apartmentlist is about .4% to .5%. Rent growth year over year is usually 1.5% to 2.9% but this year it’s down to .8%, the lowest in the last 5 years.

The US federal government has been making suggestions about further checks to Americans, but some feel it is a disincentive for low paid workers. However, a wave of evicted homeless people could bring severe weight on the economy as we all wait for Corona virus vaccines to arrive.

Compared to previous years, this drop in average rents suggests a trend with momentum. Even if with strong job numbers and retail sales numbers announced, it looks like renters are going to take a hit.

Rising vacancies, lower rent, rent control and rent moratoriums are making it a difficult environment for landlords who must discover new digital solutions to encourage and collect rent.

Cities with Largest Decrease in Average Rents

Hilliard, Ohio and Maitland Florida saw the largest decrease in rent this past month at 1.3%. Dearborn Heights, Michigan has seen the steepest drops in rent year over year at -4.2% followed by Pasadena, Maryland at -4.1%.

They report that cities which are dependent on tourism saw the biggest rent price declines. Learn more about the best cities to buy real estate and rental property.

In New York City, monthly rent prices declined .6%, in Los Angeles, rent declined .3% month to month and in Houston, rents actually rose .1% from the previous month.

In Las Vegas, a tourism and service industry dependent city, rent prices only fell by .2%. In Chicago, rents were flat for the month. In San Jose and San Francisco rents fall more steeply by .7%, and in Miami FL, rents receded by .6%.

Given the high rent prices in the Bay area and Manhattan, you might expect bigger drops, however long term leases, rent controls, and eviction moratoriums are keeping markets stable for now.

Some Cities saw Rising Rent Prices

LocationMedian 1BR rentMedian 2BR rentM/M rent change
Y/Y rent change
St. Ann, MO$646$839-0.2%7.5%
La Vista, NE$862$1,0780.4%6.3%
Hatboro, PA$1,287$1,5530.9%6.2%
Madison, AL$791$9520.2%5.7%
Rock Hill, SC$881$1,028-0.4%5.1%
Clarkston, GA$928$1,0711.6%4.6%
Melvindale, MI$719$9360.3%4.5%
Midvale, UT$994$1,234-0.1%4.4%
Franklin, WI$916$1,1350.4%4.3%
Odessa, FL$1,243$1,5470.4%4.3%

* Data courtesy of Apartmentlist

Could the Economy be Derailed?

Last week’s job creation numbers, falling jobless claims, and this week’s surprising growth in retail sales show Americans want things back to normal. These are very positive signs for landlords and renters.

Fast rising Corona Virus infection rates in the sunbelt recently might serve to warn everyone to continue to exercise caution this summer.

Some experts believe the US can’t shutdown again. Business and industry can’t open and close conveniently due to the big startup costs. It looks like we’ll have to learn to live cautiously with the virus and actively and systematically control its spread.

Speaking of spreading, I hope you will share some of blog posts with your tenants to help them understand how to fight Covid 19 in your buildings and community.  See posts on cleaning your building, making safe service calls and about using foggers and misters to disinfect.

It’s important we all take the disease called Covid 19 very seriously, keep our buildings and common spaces clean, keep 6 to 10 feet between us to avoid breathing in aerosol virus particles, and use hand sanitizer frequently.

Take care this summer and find a way to have fun!

 

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