Rents Decline During the First Half of 2020, Yardi Matrix Reports

West Coast and
tech industry markets see rents fall most drastically, while Midwest cities
stay steady

SANTA BARBARA, Calif.,
July 22, 2020
–With rents
declining rapidly since COVID-19 hit the U.S. in March, we may not see positive
year-over-year rent growth for the remainder of 2020, according to the latest Yardi Matrix® report. The year started out strong, with rent growth
around 3 percent in January and February. But in the four months since,
multifamily average rents have declined by $12.

The steepest
declines in year-over-year rents in June were on the West Coast and tech hub
markets. Four of the five markets with the largest declines in rents on a
month-over-month basis are in California. San Jose (-4.6%) and San Francisco
(-3.8%) topped the list.

Of the top 30
markets, rent growth is negative in 19 markets. Tech hub markets like Seattle (-0.4%),
Austin (-0.3%) and Phoenix (-0.2%) have been hit hard. Meanwhile, many Midwest
markets have been more resilient. Since January, rents in Indianapolis and the
Twin Cities have grown by 0.8% and 0.7%, respectively, and rents in Kansas City
have increased by 1%.

“It remains to be
seen whether there will be a long-term decline in demand in gateway markets—and
therefore a long-term decline in rents—or whether this is a pandemic-induced
trend and we will see a return to major cities once there is a vaccine,” states
the report.

Rent collections
are nothing to be worried about, yet, according to experts. June 2020 rent
collections were in line with year-over-year collections. July 2020 collections
are, so far, about 2% below July 2019 collections, with 87.6% of apartment households
paying some form of rent by July 13. However, weekly supplemental unemployment checks
are scheduled to end at the end of the month.

Yardi
Matrix’s recently updated new-supply forecast  estimates that a little over 280,000 units
will be delivered nationally in 2020, and deliveries will continue to decline
into 2021 and 2022. Dive deeper into the full June National Multifamily Report.

About Yardi Matrix

Yardi® Matrix offers
the industry’s most comprehensive market intelligence tool for investment
professionals, equity investors, lenders and property managers who underwrite
and manage investments in commercial real estate. Yardi Matrix covers
multifamily, student housing, industrial, office and self storage property
types. Email [email protected], call (480) 663-1149 or visit yardimatrix.com to learn more.

About Yardi

Yardi® develops and
supports industry-leading investment and property management software for all
types and sizes of real estate companies. Established in 1984, Yardi is based
in Santa Barbara, Calif., and serves clients worldwide. For more information on
how Yardi is Energized for Tomorrow, visit yardi.com.