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Apartment List National Rent Report

By: Chris Salviati, Igor Popov, and Rob Warnock
December 28, 2020

Introduction

Welcome to the first Apartment List National Rent Report of 2021. As we enter the new year, we find ourselves in the rental market’s slow season. The fewest moves take place during the winter holidays and as a result, rent prices tend to dip at this time every year. This December rents fell by 0.4 percent month-over-month, consistent with what we’ve seen in years past. Our national rent index is now down 1.5 percent year-over-year, and has fallen for four consecutive months.

But when we look past the national figures, we find tremendous regional variation in rent trends, reflecting how the COVID-19 pandemic has had disparate impacts on regional housing markets over the course of 2020. Expensive coastal cities such as San Francisco, Seattle, and New York City are continuing to see rents fall rapidly, while traditionally affordable mid-sized cities such as Boise have actually become more expensive over the course of the pandemic. The interactive chart below allows you to explore the city-level data and highlights the stark differences between rental markets across the country.

December Rent Decline Is In Line with Typical Seasonality, but 2020 Remains an Outlier

Nationally, rent growth over the past few months looks similar to the seasonal decline we typically see at this time of year, albeit with a slightly steeper decline. Our national rent index fell by 0.4 percent from November to December. For comparison, month-over-month declines in prior Decembers were 0.2 percent in 2019, 0.2 percent in 2018, and 0.3 percent in 2017. While the recent trend is more or less in line with the past, it comes after a summer that was anything but normal. As the COVID-19 pandemic forced renters to hit pause on their spring moving plans, prices fell steadily from March through June, during what is typically the busy season for the rental market when apartments get more expensive, not less.

At the national level, 2020 can be broken into three distinct phases:

  1. January to March: the pandemic had yet to significantly disrupt everyday life in the United States, so rents followed their normal trajectory. After a typical winter slump, they picked back up as the weather and the market started to warm.
  2. March to June: the pandemic truly disrupted the market. Americans were told to avoid non-essential moves, slowing the market tremendously. In previous years rents rose one percent per month during this period, but in 2020 they moved in the opposite direction.
  3. Since June: the overall national trend has moved in a fairly predictable fashion. During the summer renters started moving again and prices rose through August, where the market typically peaks. Since then they have cooled, also in line with previous years. That said, despite the apparent stabilization, regional variance in rent trends remains high, which we discuss further below.

Our national rent index finishes 2020 down 1.5 percent on the year, significantly lower than in previous pandemic-free years. In 2019, rents increased by 2.2 percent; they were up by 3.0 percent in 2018, and up 1.4 percent in 2017.

Our nationwide rent index masks a tremendous amount of regional variation taking place under the surface. December brought a modest, predictable 0.4 percent reduction in rents nationally, but that change is a blend of a few large cities where rents are dropping quickly and many other smaller cities where rents are more stable, if not rising. Last year, 65 of the nation’s 100 largest cities saw rents drop in December; this year, the number is just 57. Fewer cities got cheaper, but those cities got cheaper faster. This aggregates to a national trend that appears similar to previous winters but hides some new trends. Most notably, the nation’s smaller, more-affordable markets have absorbed most of the summer’s rent rebound, while larger, more-expensive markets have been saddled with unrelenting price drops.

Rent Declines Are Concentrated in Large, Expensive Markets

A sample of the nation’s 50 largest cities highlights the degree to which COVID-19 has disrupted the rental market in expensive cities. Below we visualize the relationship between rent levels and rent changes. There is a clear correlation between the two; the cities that had the highest rents in March (moving right along the x-axis) have seen the steepest rent drops since then (moving down along the y-axis).

As the most-expensive and most-impacted city in the country, San Francisco leads the pack on both dimensions. With a rent decline of 26.7 percent since March, the median 2-bedroom apartment in San Francisco has dropped from $3,147 to $2,305. Following San Francisco is a cluster of expensive coastal markets that have also been heavily impacted.

Seattle and Boston had the nation’s most dramatic December rent drops (3.6 percent and 3.1 percent, respectively), pushing them past New York which had previously occupied the number 2 spot throughout most of the summer. Today, Seattle ranks second with a 22 percent rent decline since March, Boston ranks third, New York City falls to fourth, and Washington DC rounds out the top five. San Jose and Oakland, two other cities in the San Francisco Bay Area, also find themselves in the Top 10. As of this month, 12 cities across the country have seen rent prices fall by more than 10 percent during the pandemic months.

It is notable that these markets are some of the most expensive in the country, and they all have a high share of their workforces employed by the sorts of companies that have been quick to embrace remote work. No longer needing to be close to the office, and with many local amenities still closed, some of these workers may be questioning their choice of location. Furthermore, workers who have been laid off or furloughed in these cities likely have little buffer to continue affording sky-high rents. Coupled with the seasonal trends mentioned earlier, these factors have led to a softening in demand that has caused some of the sharpest rent dips on record in these cities.

In Affordable Midsize Cities, Rent Growth Accelerates

While the pandemic and related economic uncertainty have generally caused a slowdown in rental activity, some cities have actually seen rent growth accelerate in recent months. In Boise, rents have increased nearly 10 percent since March, more than double the rent growth it experienced during the same period last year. Our rental price data is mirrored by evidence that Boise’s for-sale market has also been heating up. As the priciest cities lose some of their allure, interest in more affordable mid-sized cities appears to be picking up, potentially driven in part by renters taking advantage of remote work arrangements. As many of us continue to spend the majority of our time at home, it is unsurprising that some are now seeking out new locations where they can afford more space.

While we may be seeing the early signs of renters making housing choices independent of where their jobs are located, many of the cities with the fastest rent growth are still within long commuting distance of larger job centers. For example, Greensboro, NC is within a 90 minute commute of Charlotte, Chula Vista, CA is a nearby suburb of San Diego, and Riverside, CA is a commuter city for Los Angeles. This trend may indicate that even workers who are planning for a permanent shift toward remote work still value the option to go into the office when needed.

Another way to visualize this trend is to split our rent data into two groups: principal cities and suburban cities. Per the Census Bureau, principal cities are the cities that lie at the core of each metropolitan area. They are typically the metro’s largest and they generate the greatest economic output. Suburban cities, on the other hand, are the remaining non-principal cities within each metro. For example, San Francisco is a principal city while Oakland and Berkeley are suburbs, and New York City is the principal city while Newark and White Plains are suburbs.

In suburban cities, rents rebounded from the pandemic quickly and sit 0.5 percent higher today than they did at the start of the year. Meanwhile, rents in principal cities have fallen steadily and are 9.3 percent lower today than in January. In 27 of the nation’s 30 largest metropolitan areas, principal cities are experiencing faster rent drops than their surrounding suburbs. For a deeper dive on this urban/suburban divide, or to explore rent trends within a specific metropolitan area, please see our recent report: The Suburban Rent Rebound.

Dramatic Swings in Housing Availability Are Impacting Rent Prices

Vacancy data from our online marketplace help explain the strong regional divides described throughout this report. The pandemic has led to more vacancies in some cities and fewer in others, as renters have new budgets and new housing preferences. Rents have adjusted accordingly. Where vacancies rise, prices fall, and vice versa. Take for example the cities with the most dramatic rent increases and decreases since March 2020.

In San Francisco, our vacancy index rose from 5 percent in March to nearly 12 percent in August, corresponding with a rent drop that has persisted throughout the year. A similar story has played out in Seattle and Boston. Meanwhile, Boise’s vacancy index shrank to less than 3 percent during that same time period, and today finds itself with the nation’s fastest-growing rents. Chesapeake, VA and Fresno, CA have also seen rents skyrocket while vacant apartments become harder to find. But the trend is not limited to just these six cities; we have made data available for nearly 100 major cities in our recent report: Apartment Vacancies Are Peaking In Expensive Markets.

Conclusion

Since the start of the COVID-19 pandemic, we have seen shelter-in-place ordinances put a halt to normal moving activity, combined with staggering job losses as huge segments of the economy were put on pause. Although some laid off and furloughed workers have been brought back, the unemployment rate remains startlingly high, and the economic recovery is likely to be slow and gradual. This heightened financial hardship has led to an increase in downgrade moves as many Americans are forced to look for more affordable housing options.

At the same, there is evidence that a growing embrace of remote work will outlast the pandemic, which could significantly alter the housing choices of workers in these flexible arrangements. Amid this backdrop, we’re seeing a sharp dropoff in demand for expensive rental units in cities like San Francisco and New York, while more affordable midsize cities such as Boise are continuing to heat up. Vacancy rates have shifted dramatically but largely stabilized, signalling that some cities have reached new rent price equilibriums.

For complete data, head over to our rental data page, where you can download the most recent estimates for you city, as well as historic data going back to 2017. And as always, feel free to contact us with any questions!

A Note on Our New Rent Estimate Methodology

Apartment List has long been committed to making our rent estimates as accurate and transparent as possible. With this in mind, we recently introduced a new methodology that rethinks our approach while building upon the robust foundation that was already in place. The most significant change in our new methodology is that we are now aiming to identify transacted rent prices, as opposed to the listed rent prices on which our old methodology was based. This controls for price fluctuations that arise over the course of a vacancy. Using these transacted prices, we calculate rent growth rates based on a same-unit approach that controls for compositional changes in the rental stock. As before, we continue to combat luxury bias in our rent data by using fully-representative median rent statistics from the Census Bureau’s American Community Survey.

A full report on our new methodology is available here. And if you have any questions or custom data requests, you can reach us at research@apartmentlist.com.

For more context on local data, check out our market-specific rent reports for the following cities:

If you would like to get future updates from Apartment List Rentonomics, please subscribe to our email list.

About Apartment List Rent Reports:

Apartment List’s Rent Reports cover rental pricing data in major cities, their suburbs, and their neighborhoods. We provide valuable leading indicators of rental price trends, highlight data on top cities, and identify the key facts renters should know. As always, our goal is to provide price transparency to America’s 105 million renters to help them make the best possible decisions in choosing a place to call home. Apartment List publishes Rent Reports during the first calendar week of each month.

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HOUSING ECONOMIST
Chris is a housing economist at Apartment List, where he conducts research on economic trends in the housing market. Chris previously worked as a research assistant at the Federal Reserve and an economic consultant, and he has BA and MA degrees in economics from Boston University. Read More
CHIEF ECONOMIST
Igor is the Chief Economist at Apartment List, where he leads the Rentonomics team in publishing original housing market research. Igor teaches an undergraduate seminar titled "Housing, Neighborhoods, and Homelessness" at Stanford University, and his research has been published in the American Economic Review. Read More
RESEARCH ASSOCIATE
Rob is a research associate at Apartment List, where he examines trends in the housing and rental markets. Previously he worked in public health policy, and before that, graduated from UCLA with a degree in Globalization. Read More
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