No one could have predicted the rental market trends in 2020. The market faced many hurdles as the impact of the coronavirus pandemic led many people to move, including a large percentage that bought their first homes and others who moved in with friends or family members to cut costs.
Rental prices dropped in major cities, including New York and San Francisco, as employees quickly switched to remote working. Moving to tech hubs such as Austin, Raleigh and San Francisco was largely put on hold as employers encouraged workers to work from home through part of 2021.
The pandemic is likely to change the expectations and behaviors of renters for an extended period as people grew accustomed to conducting virtual real estate tours and finalizing leases and other financial transactions at home so they could easily social distance.
Here are six rental market trends we expect will remain the “new normal” for renters and property managers.
1. Rental prices will remain flat in the first half of 2021
Rental prices for apartments will likely remain stable during the first half of 2021, which can help consumers who have lost jobs temporarily or had their hours slashed because of government-mandated shutdowns, said Brad Dillman, chief economist at Cortland, an Atlanta-based multifamily investment and management firm.
Rents are a mixed bag with dense urban areas seeing weaker rental prices and drops in average rents, while some suburban sunbelt areas project small increases in rents, said John Loper, an associate real estate professor at the University of Southern California.
“There has been a shift of tenants out of urban areas with high rents due to employers having employees work from home and employees relocating to less expensive and less dense areas,” he said. “The big question is how many of them will stay in the less expensive areas they have relocated to and how many will return to urban areas.”
Denver reported a 2.6 percent decrease in rents downtown (RentPath data shows an even steeper decline), but an increase of 1.3 percent in its suburbs, said Jenny Usaj, owner and broker of Usaj Realty, a Denver-based real estate brokerage.
“I know many luxury apartments downtown offering every amenity concession possible to keep from dropping their rental rates hoping for post-pandemic demand to return to the core urban area.”