Rents Drop, Home Sale Prices Steady Amidst Coronavirus Pandemic

Rents fell in 16 major markets in March, leading to the biggest slowdown in 30 days since 2014. According to Zillow’s real estate market report, the slowest rent growth were in Baltimore, where it was only up .4% from last year, and New York, up 1.1% from last year.

Prior to the Coronavirus pandemic, rents were growing 3.4% year over year in March. From March to April 2020, rent price growth slowed in 33 of the 35 largest U.S. cities, with the exception of Columbus and Cleveland. The biggest rent decreases were seen in Austin, which fell 1.1%, Charlotte, which fell .7%, and Baltimore and San Jose, which both decreased .6%.

“We’re seeing rents slow now as some people are no doubt pursuing more-affordable options such as moving back in with parents, moving to a less-expensive area or doubling up in instances where it can be done safely,” Skylar Olsen, senior principal economist at Zillow, said in a press release.

However, home sale prices stayed stable due to low inventory and fewer new listings. The average US home is worth about $250,000, an increase of 4.3% last year. New for-sale listings are down 27.6% from last year, though they increased 12.5% since April. Buyer demand for homes is still high as mortgage rates still hover around a low 2.63%.

According to Zillow’s forecast, home prices may fall 2.7% by October. Zillow expects home prices to rebound in by the third quarter of 2021. Zillow’s forecast includes three scenarios, the most “pessimistic” scenario predicting that home prices may drop up to four percent and remain low throughout next year. The most “optimistic” scenario predicts home prices dropping only two percent and recovering early next year.