The COVID-19 pandemic has had a big impact on rents and leasing activity in 2020, according to RentCafe’s year-end report. To get the big-picture overview, the firm analyzed 5.8 million renter applications nationwide from RentGrow and rent data from Yardi Matrix.
The findings revealed several trends heading into 2021.
Rental activity has been 10% slower, with a shorter rental season that started after a two-month delay caused by stay-at-home orders. While the busiest renting season typically is from March to August, this year it didn’t kick off until May with a 27% monthly increase in renter activity. The moving season also was cut short, lasting for about two months, as renter movement dropped by 13% in July.
The pandemic also had another effect on 2020’s renting activity, with more residents deciding to remain in their current homes. According to RentCafe, “10% fewer renters applied for new apartments this year, breaking a years-long trend of single-digit increases.”
Generation Z renters overtook Gen X and is now the second-most-active renter generation after millennials. It also was the only renter segment to see an upward trend in movement in the past three years as the share of rental applications from other generations is shrinking. In 2020, 23% of renter movement is owed Gen Z, up from 12% in 2018. Gen X makes up 18% of moving renters, down from 20% two years ago. Millennials comprise 47% of renters on the move, after making up more than half of renting activity in the past two years.
Renters’ median income has come to a halt for the first time in three years. In 2018, according to the report, the median renter income increased by 1.5% to reach $36,552. It rose even faster in 2019, by 5.1% to $38,400, and has stayed there for 2020.
Renter activity dropped in 16 of the nation’s 30 largest cities as the number of apartment applications decreased compared with previous years. Memphis, Tennessee, had the most significant drop with a 21% decrease in rental applications. The second fastest decline was seen in Chicago, with 16% fewer renters moving to the Windy City.
In addition, 18 of the nation’s 30 largest cities saw more renters leaving in 2020 compared with last year. “Furthermore, half of the largest cities registered more pronounced activity in terms of renters moving out of the city rather than moving in,” noted the report.
Detroit saw the biggest impact, with a 35.7% increase in renters moving out since 2019 as well as 13% drop in renters moving in. Oklahoma City follows with 34.2% renters leaving this year and 3.25% fewer moving in compared with 2019. New York takes third, with a 25.1% increase of renters moving out.
While the national average rent remained flat as of November at $1,465, 18 of the 30 largest cities saw rents decrease or stagnate, with the sharpest decreases in the nation’s most expensive markets for renters. San Francisco’s average rent had the fastest decrease in 2020, coming in at $3,055 after a 17.3% yearly drop. Manhattan follows at a 10.8% decrease to $3,761, pushing the average rate under $4,000 for the first time in years. However, on the other end of the spectrum, Phoenix’s average rent is still strong at $1,182, the most significant yearly surge of the 30 largest cities.
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