I’m in Awe of How Fast Rents Plunge in San Francisco, New York, Boston, Los Angeles, Other Expensive Cities. Rents Decline Even in Houston & Dallas. National Average Turns Negative
Work from anywhere, the unemployment crisis, the oil bankruptcy, people looking for a cheaper, less crowded place to live, the land frenzy to buy houses.
By Wolf Richter for WOLF STREET.
There was even a story about NPR: people from large, densely populated, and expensive cities showed up in small towns in beautiful rural areas for a few weeks to escape and then get stuck, now that they can work remotely, buying and closing houses send their children to local schools. These are just stories, and there are millions of them now. But it shows in demand for rents in these big, expensive markets, where vacancies are rising and landlords have to compete with each other to fill their units and tenants are moving within the city for a nicer place for less money get – the free upgrade you’ve been waiting for after years of costly downgrades.
And I’m in awe of how quickly rents are falling. San Francisco has been the big shock for months, but now other cities are too. And they have negatively impacted national average year-over-year rental growth.
Despite the steepest slump, rents in San Francisco are still the most expensive in the US.
The median asking rent for one-bedroom apartments in San Francisco fell 1.1% to $ 2,800 in October from September to September, after falling sharply in the previous months, bringing the slump since April ($ 3,500), according to Zumper’s on $ 700 or 20% rental report. Since the peak in June 2019 – which barely exceeded the previous high of October 2015 – the median asking rents for 1 BR apartments has fallen by almost 25%, or almost USD 1,000!
The median asking rent for 2-BR apartments in San Francisco fell 2.9% from September to USD 3,690 in October, which is the slump since April (USD 4,540) to USD 850 or 19% and the slump after 12 months to 21% brought. Since the peak in October 2015 (USD 5,000), which was almost reached in June 2019, the median 2 BR asking rent has now decreased by USD 1,310 or 26%!
Looking at it from a slightly different angle, Apartment List’s rental index, which uses rental changes of the same rental unit over time, similar to the sales pair method of the Case-Shiller House Price Index, and reflects all types of apartments, fell 23.4% over the year – over the year and 24.5% from the peak in August 2019:
Despite the slump in rents, San Francisco remains the most expensive rental market in the US, despite the fact that there are a handful of postcodes in Manhattan and Los Angeles that are still more expensive than San Francisco’s most expensive postcode.
The rental dates of Zumper and Apartment List do not include discounts, e. B. “one month free” or even “three months free” or “free parking for one year” or whatever. The consequence of these concessions is that the effective rents are reduced without this affecting the nominal asking rents. This is good for landlords who need to show their increasingly nervous bankers that despite such appearances and reports, the floor is not falling out of their apartments, so to speak.
New York City rents fell.
For 1-BR apartments, the median asking rent fell by 1.9% in October compared to September to USD 2,800 and, according to Zumper, by 15.0% year-on-year. For 2-BR apartments, the median asking rent fell by 3.0% in October compared to September and by 17.1% compared to the previous year.
From a slightly different angle, Apartment List’s rental index for New York City, which only goes back to 2017, peaked in December 2019 and has since fallen 17.2%, with the largest declines in the last five months were recorded (the graph is on the same scale as the San Francisco diagram):
The 17 most expensive rental markets.
The table below shows the 17 most expensive main rental markets by median asking rents, based on Zumper data, plus the percentage change compared to the previous year and in the shaded area of the prime rent and the change from the high. Chicago and Honolulu began declining rents in 2015. In 12 of the 17 cities on the list, the 1-BR asking rents have fallen by double digits compared to the highest level. Chicago and Honolulu have the largest declines, followed by San Francisco and New York City:
“Median” means that half of the asking rents are higher and half are lower. “Offer rent” is the advertised rent. It does not measure which tenants are currently paying rent, and no concessions are taken into account.
Zumper collects this data from the Multiple Listings Service (MLS) and other listings, including its own listings, in the 100 largest markets, but only for apartment buildings, including new builds. Single-family houses and rental apartments are not included.
Rents in other large and expensive cities are falling to multi-year lows:
Below you will find diagrams based on data from the apartment list, some of which differ slightly from the Zumper data due to their methodology. Instead of the average asking rents in the market, the asking rents of the same apartment units are used in the conversion time, which avoids some of the problems associated with mid-asking rents. Apartment List converts rental data to an index of 1, with data going back to 2017. All of the following charts are on the same scale. They show changes in rents, but not dollar rents.
Seattle rents have fallen 14% since March:
Los Angeles rents have declined 10% since September 2019:
Denver rents have declined 7% since August 2019:
Boston rents fell 17.3% from August 2019, including a 5% drop in October from September:
Washington DC rents have decreased 12% since September 2019:
Philadelphia rents have declined 5% since July 2019:
Houston rents have decreased 4% since August 2019:
Dallas rents have decreased 4% since July 2019:
Chicago rents have fallen 14% since March 2020:
However, Apartment List’s data only dates back to January 2017. According to Zumper data, Chicago rents peaked in 2015, and rents fell in late 2015 and 2016 before stabilizing in 2017. These movements in late 2015 and 2016 are not reflected here.
But rents in St. Louis, MO haven’t gone down in the past year:
The national median rent has fallen by 2% since its peak in August 2019.
Rents in many smaller markets have risen year-on-year, in some by double digits. But falling rents in key markets now outweigh rising rents in smaller and cheaper markets, and the national median rent in October fell 1.4% year-over-year and 2.0% from its August 2019 peak, according to the Apartment List % back ::
There is a housing shortage until suddenly a housing glut occurs: see San Francisco et al. Read on … The housing market is going crazy, everyone sees it, but it cannot last
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