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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