According to recent data, some of the primary rental trends associated with the Covid-19 pandemic are beginning to reverse. That’s one of the major findings of the recently-released November Rent Report from Zumper. The report found fears of a recession, along with declining occupancy rates, are being reflected in rental prices, especially in regions that benefitted from large inbound migration from early 2020 to mid 2022.
“We’re seeing pandemic trends begin to unwind, and unwind quickly, as renters hunker down in anticipation of a recession,” says Anthemos Georgiades, CEO of Zumper, the largest privately held rental search marketplace in the U.S.
“With inflation and interest rates high and the labor market beginning to tighten, Americans are holding off on major economic decisions. Household formation has paused and even inverted, driving demands down and cooling off rent prices.”
Median rent on one-bedroom apartments has declined 2.9% month-over-month in Nashville, and 6.3% in Fresno and Tulsa. In Arizona, rental price hikes have slowed in cities like Phoenix, Scottsdale and Mesa, while median rental rates on one-bedroom apartments in Chandler, Gilbert and Tucson experienced a decline in November. The shifting preferences now have Boston and San Francisco tied for the most expensive rental rates in the nation, behind perennial kingpin New York City.
Gradual decline
Across much of the U.S. rents have inched lower. In November, median price for a one-bedroom was flat vis-à-vis October. The median rent on two-bedroom apartments fell four-tenths of a percent and is down or flat in 60% of Zumper’s top 100 cities.
Notably a number of metros that in recent years have scored large and ongoing price growth are in the early stages of a leveling-off process. “Over the last two years we saw unprecedented rises in rent prices driven by a booming economy, low interest rates, a one-off spike in demand post vaccines, and supply chain issues that delayed new units coming to the market,” Georgiades says, adding that has all changed given the high interest rates, a tightening labor market and decades-long highs in inflation rates.
Slowing migration
One of the big stories of the pandemic was a wholesale flight of residents from Northern states to those in the Sunbelt. Month-over-month price hikes in places like Minneapolis and Chicago suggest many who fled big cities during the pandemic are now returning as employers mandate their workers return to the office at least a few days weekly.
In spots that gained a number of migrants, the rising rent trend line has flattened. A good example is Arizona’s one-bedroom rents, which shot from about $993 to $1,326 between April 2020 and early 2022, but now are not much higher than at the start of the year. In Phoenix, the one-bedroom apartment’s median rent rose just 0.7% month over month, and the two-bedroom rental price fell 0.6%.
Holding strong
Its recent 1.8% month-over-month drop in one-bedroom media rent notwithstanding New York City has retained a rock-solid hold on the title of the country’s most costly city for renters. A combination of housing supply constraints and unending demand means the Big Apple will likely continue for some time to command the top spot in Zumper’s list of most expensive metros. The places picking up renters who no longer can afford Manhattan and Brooklyn are also up, with the one-bedroom apartment median in Newark, N.J. having risen 4.5% in November from October.
Having slid 2% in November, Boston is tied with San Francisco for the title of second most costly markets. The remainder of the top 10 in this order, are Miami, San Jose, San Diego, Los Angeles, Washington, D.C., Oakland and Fort Lauderdale.