Rental Property Trends
A big trend in rental apartments is happening, but isn’t being reported as it should be. It represents a significant threat to many urban landlords and is altering the rental property landscape.
Covid 19 in community, office and transit, retail shutdowns and business closures with lost income, persistent high rents, high taxes, political polarism, work at home freedom, violent protests, wicked summer heat and humidity, defunding the police, and surging crime rates is causing an exodus of renters and homeowners in America’s big cities.
While the big cities, their economies, tax base and housing markets suffer, other cities appear to be prospering.
Fleeing the Inner Cities
Renters are fleeing the inner city apartment developments for roomier single-family homes in the suburbs and outlying towns.
That’s a lot of factors encouraging this flight of people from the largest metros. Which one is the real factor? Because people were leaving before the Corona Virus was brought into the country. And in California for many years now, the daily exodus is well known.
We wonder if Corona Virus is supercharging this growing wave of people leaving the big cities of America.
“First off, it’s the virus, and people are just feeling done with small apartments. Then came the protests,” said Wiebicke. People are saying “they just can’t handle the city right now. They’re saying they want a quiet yard and most of all a home office.” — from a post in the Guardian.
When Will the Exodus Stop?
Some experts might suggest it’s only a short term crisis, with everything returning to normal by mid 2021. Yet the severity of this recession and pandemic is forcing more renters and mortgage holders each month to act on making a change. Their frustration limits have been hit.
And a coming wave of tenant evictions might be another factor to talk about. Out of all this are big challenges for landlords and their property management companies. How will they attract new tenants and hang onto those in lease?
How Much Will Rents Be Affected?
And in the wake of these defections to the suburbs, countryside and other states such as Texas, Virgina, North Carolina, Vermont, etc., lower real estate values, rising vacancies, and falling rents in the cities are occuring. Rents have been falling in Manhattan and the Bay Area.
And rent prices are climbing in small towns across the country due to competition and shortages.
Not everyone who wants to, can move however. Consider if more housing was available in the burbs and small towns, and if people had the financial and physical means to move, how much stronger the migration trend would be.
It’s said there is a several months backlog of bookings of rental trucks in the LA area.
New York is Ground Zero for the Exodus
It’s not just homeowners either. Renters are fearful of not being able to pay their city rents and falling into a huge debt they will owe when the Federal aid and eviction moratoriums end. Even Bloomingdale’s was sued for back rent owed, and without jobs, many big city dwellers will see mounting rent debt. Some may even skip out on their leases.
Tenant Life Satisfaction Falling
One big reason both renters and homeowners in these downtown regions are citing for the moving trend is boredom. Since restaurants, bars, theaters, and gyms are closed, residents have nowhere to go and nothing to do. There you have it, renters are leaving due to boredom and low life satisfaction.
1 or 2 months free rent likely won’t work as wealthier residents and renters flee the city. Rent prices may drop further allowing lower income renters to move into the vacated apartments. A new reverse migration might be happening. Of course the housing shortage plays a big role as does new construction.
Add to this scenario, thousands of college students who may not be going to school this fall, or who may find themselves leaving when a fall Covid 19 outbreak happens, resulting in more shutdowns.
Selling a high priced home in the city leaves the homeowners with lots of cash to relocate to Florida or Vermont or even upstate New York as an example.
Overall then, the benefits of leaving the cities is climbing and this trend is getting more coverage in the media. What do the stats say?
In a Zillow press release, Jeffrey Tucker reported that In urban areas, median home price growth has plummeted 9.3% below pre-pandemic to the end of June, but is only down just 3.1% in the suburbs. However, Tucker also reports less changes in cities other than San Francisco and New York.
Some of the exodus crowd are wealthy people with a 2nd vacation home. They’re able to stay in that home and ride the Covid 19 crisis out. And for all those who want to buy, mortgages are moving to new historic lows making financing almost a non issue.
The exodus is also taking companies, talent, and money into new locations where taxes are reduced and costs are much lower. That changes the business model considerably for companies.
How to Keep Your Tenants
Learn more about keeping your tenants leased. The key is to improve services. Many of them are very uncomfortable due to social distancing and stay at home isolation. Apartment buildings weren’t designed for 24 hour living and office work.
Offering digital amenities might be the quickest fix, as it aids in their at home work needs.
Getting tenants released also requires good communication. Traditional landlords can’t get the right quality of messaging using a door/office notice. What’s needed is a communications strategy that encourages tenants to see beyond the Corona Virus pandemic, that the vaccine is coming, and the pandemic will pass.
Reminding Tenants that This Will Pass
Most tenants will fear losing their jobs, and most have family and long time friends in their city or neighborhood. There’s lots of reasons to stay. Tenants need some support with their outlook, because the outlook delivered via the media is poisonous to your business goals.
The media make tenants feel more uncomfortable, victimized, and restless, and they encourage the very behavior tenants are deciding to flee. Taking your tenants to a calm oasis online may be enough to keep them their units.
It’s not a one and done matter. It’s part of a thoughtful marketing and communications strategy that makes your business essential to your tenants lives and provides a beacon of hope for those headed for trouble.
Each month you must refresh, in a new way, the joy of living in your units and cities.
Learn more about ManageCasa and how you can manage tenants and maintenance better while automating to save time, money and increase tenant satisfaction.
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