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.
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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.