Many renters have transitioned into homeownership during the pandemic, and rental demand and prices are dropping in major cities like New York and San Francisco, ApartmentList reports. “The pandemic is likely to change the expectations and behaviors of renters for an extended period, as people grew accustomed to conducting virtual real estate tours and finalizing leases and other financial transactions at home so they could easily social distance,” ApartmentList notes in a new report that looks at rental trends heading into 2021. Among the trends the online rental marketplace expects to dominate in the new year:
Rental prices to flatten for first half of year. Prices for apartments will likely stabilize during the first half of 2021, reflecting the still-high number of Americans who have lost work due to business shutdowns because of the pandemic. “Overall, multifamily markets have remained tight from an occupancy perspective, even as rent growth has been weak to negative as operators focus on renewals,” Brad Dillman, chief economist at multifamily investment and management firm Cortland, told ApartmentList. “As a result of this resiliency, we expect rent pressures to rebound in the second half of next year. This rebound appears sustainable given the relative strength of the employment recovery as it, in turn, is likely to slow.” Rental prices likely will be weakest in dense urban areas, while suburban sunbelt areas likely will see small increases in rents.
Affordable housing demand will grow. “Given the undersupply of housing, estimated by ourselves and others, it is possible the country will see a renewed focus on housing affordability narratives as rent growth pressures resume next year,” Dillman told ApartmentList. Also, new construction is facing delays. Evictions likely will grow in the first and second quarter of next year as the national moratorium, which Congress is likely to extend through January, expires. Demand for affordable housing will likely grow as more people look for one-bedroom apartments in suburban areas, predicts Freddie Zamani, CEO of EcoSmart Builders, a construction company.
Remote work influences addresses. As remote work grows more commonplace, Americans may be more enticed to move. “We don’t anticipate job seekers placing as much emphasis on location as it relates to their commute as in years past,” Dillman says. But as cities may lose residents, rental prices may fall sharply as a result. Americans will “slowly but surely” be attracted to city life once again as prices moderate, the report notes.
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