US: Apartment rents plunge
across the country as people
flee major cities and
'pandemic pricing' takes hold
- Rents are dropping in the most expensive markets as people flee pandemic
- San Francisco rents dropped a staggering 9% in May from a year ago
- New York, Boston, Seattle and Miami have also seen average rents decline
- Meanwhile home prices in rural and suburban areas have been driven up
San Francisco (above) recorded the biggest decline in rents on record in May, when the average rent of a one-bedroom apartment declined 9 percent from a year ago
Rents in major cities across the country have seen steep declines in recent months, as the coronavirus pandemic causes people to flee crowded urban areas.
San Francisco recorded the biggest decline in rents on record in May, when the average rent of a one-bedroom apartment declined 9 percent from the same month a year ago, according to apartment listing platform Zumper.
'It seems the pandemic has shifted the demand for apartments away from the most expensive cities, since usually demand picks up as we head into summer but now the opposite is true,' wrote Zumper analyst Crystal Chen
'As more and more companies move into remote work, many renters don't want to pay the big city price tag when they are unable to use the amenities and are looking for more affordable options outside of large, metropolitan areas,' she continued.
Overall, the national one-bedroom rent dropped 0.2 percent last month to $1,217, while two-bedrooms were flat at $1,473, according to Zumper
Some real estate agents refer to the new reality as 'pandemic pricing,' as property managers cut monthly rents and offer sweeteners like one month rent-free to lure tenants in a soft market.
In New York City, which has been under draconian lockdown restrictions for three months, hundreds of thousands have fled the city, either permanently or temporarily.
One-bedroom rents in New York were down 1 percent in May from a year ago, while two-bedroom rents were down 2.4 percent.
From March 1 to May 1, about 420,000 New York residents left the city, which has a population of nearly 8.4 million people, particularly from the wealthiest neighborhoods, according to an analysis of cell phone location data from the New York Times.
Many sought to buy homes in Connecticut and in upstate New York, leading to fierce bidding wars in those areas.
'It is unlike anything I have ever seen. We're busier in May than we ever were in the height of the summer, which is our high season in the Catskills,' Robin Jones, an agent with Country House Realty in upstate Sullivan County, told the Times. 'I've been in five bidding wars in the last few weeks.'
Jones said her typical clients were New Yorkers who have discovered the ease of working from home, and see no upside to paying astronomical city rents when cultural events, restaurants, and bars are all closed.
In Boston, the country's third most expensive rental market, the average rent on a one-bedroom dropped 2 percent year-over-year, and two-bedroom rents were down 1.8 percent, according to Zumper.
On the West Coast, Los Angeles saw one-bedroom rents drop 3.6 percent, while two-bedrooms were down 1.7 percent.
Seattle saw an annual decline of 4.3 percent for one-bedroom rents and 4.6 percent for two-bedrooms.
In Miami, the average rent for a one-bedroom dropped 2.2 percent, and for two-bedrooms it was down 0.4 percent in May.
Some cities, including Oakland and Baltimore, say rents increase slightly in May, bucking the trend.
Providence, Rhode Island saw the largest month-over-month increase, with one-bedroom rent jumping 5.3 percent, to $1,400.
Overall, the national one-bedroom rent dropped 0.2 percent last month to $1,217, while two-bedrooms were flat at $1,473, according to Zumper.
On a year-to-date basis, both one and two bedroom rents are down 0.5 percent.
Stock markets across the globe have plummeted amid fears of the economic impact of a potential second wave of coronavirus.
However, in the UK, the benchmark FTSE 100 index actually rose 0.7 per cent and the domestically focused mid-cap index 0.9 per cent, despite news of the economy's biggest ever fall recorded earlier this year as a result of the pandemic.
Meanwhile, the three main share indexes in the US - the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite - saw their worst day in weeks yesterday, while in Asia, benchmark indexes have lost ground in China, Japan and Hong Kong, and the share market in Australia closed in the red for a second day.
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