The first year of 2020’s COVID pandemic spurred home price appreciation to increase at unprecedented rates. This second year of the COVID pandemic, 2021, is causing the same phenomenon within the rental markets.
Rents Nationwide Posting Never-Before-Seen Increases in 2021
Rents were basically flat during 2019. Then came the pandemic…Since the start of 2021, rents around the country began climbing gradually and consistently. However, In April of 2021, rents began jumping…quickly.
When July 2021 rolled around, the rental market exploded. Zumper’s National Rent Index for July 2021 registered that explosion by informing us that nationwide rents jumped +7% y/y for one-bedroom units and +8.7% y/y for two-bedroom units.
Despite Slower Rent Growth in Some Big Cities, Rent Prices Surging
Zumper indicated that 30 of its top 100 cities were seeing rental prices go down during 2020. This year, there are only 23 major cities seeing lower rental prices. And even in those metro areas where rent prices are down, suburbs surrounding those major metros are experiencing rent increases.
Metro areas that have experienced the most rental price growth include, according to Zumper, Phoenix, Miami, Atlanta, Dallas, Orlando, San Diego and Tampa Bay.
Suburban Rents Increasing Faster than Metro Rents in Some Locations
Due to an influx of some 70,000 people per year over the past decade, Atlanta’s suburbs are seeing fiery rent growth compared with its own relatively modest gains of +8.8% and +10.1% gains for one-bedroom and two-bedroom units respectively. Take a look at rent increases y/y for just one-bedroom units in:
- Alpharetta – +18.6%
- Duluth – +17%
- Marietta – +12.8%
- Sandy Spring – +12.9%
- Smyrna – +15.4%
- Athens – +19%
Some Markets Down Substantially
San Francisco’s Bay Area is the only metro area where rent prices are down across the board. Its median one-bedroom rent is down -15% y/y and fell another –2% in July compared with June. Oakland’s rents are down -9.9%. San Jose rents are down -5.7%. Of the 21 Bay Area cities that Zumper tracked, only one of those 21 cities has a median one-bedroom rent that is positive compared with 2020 rent prices.
Other metro areas with negative rent growth compared to 2020 prices include Minneapolis (-15%), Philadelphia (-9.9%), Seattle (-8.8%), Honolulu (-7.7%), Los Angeles, (-5.8%), New York City (-5.6% after posting a +4.3% m/m gain in July), Chicago (-5%), Washington DC (-4.9%) and Boston (-2.1%).
To illustrate the differences in rent prices in major cities and their surrounding suburbs, Boston’s suburbs of Lawrence, Manchester and Salem are posting double-digit rent percentage increases.
One Big Wild Card
The delta variant of COVID-19 is the wild card in rental price increases, as well as many other economic indicators. With COVID cases now ramping up at comparable rates to January peaks, it’s clearly too soon to take any indicators at face value.
Expect continued volatility in every aspect and data point within the economy.
Thanks to Zumper.