Apartment Rent Declines Starting to Slow

After holding up better than other property types, apartment rents began to deteriorate in the summer. However, a couple of new reports show those declines are starting to slow.

The December 2020 Zumper National Rent Report found that the national one-bedroom median rent remained flat last month at $1,224, while the two-bedroom median increased 0.3% to $1,487. For the year, the one-bedroom median was up 0.6%, and the one-bedroom median was up 1.8%.

Growth rates in the nation’s seven most expensive markets for one-bedrooms—San Francisco, New York City, Boston; San Jose, Oakland, Los Angeles and Washington DC—remain negative, but not as low as they were throughout the summer months. 

On average, monthly growth rates in median one-bedroom prices in these seven markets were 0.8 percentage points higher than the month prior, which is the highest average growth rate change in these markets all year. Still, there are continued issues in San Francisco and New York, the nation’s two most expensive rental markets, which had lower growth rates last month than the month prior. 

While the seven most expensive markets experience historic price drops, seven other cities have thrived during the pandemic, according to Zumper. These markets, including Providence, RI; Cleveland, OH; Indianapolis; Durham, NC, Newark, NJ, St. Petersburg, Fla, and St. Louis, have grown more than 18% in median one-bedroom price since March. Zumper says growth rates in these cities were on average two percentage points higher last month than the month prior. 

“These historically cheaper cities have become desirable destinations for Americans that have migrated since March,” according to Zumper. “Several of these cities like Newark and Providence serve as cheaper alternatives to a neighboring, more expensive market [New York City and Boston, respectively)] Other cities in this group are historically cheaper markets in the Midwest where a renter’s dollar goes further in terms of square footage and bedroom number.”

The slowing rent declines dovetail with a recent report from ApartmentList, which found that its national index for November has stabilized back to a more typical trend during the past few months. 

Rents fell 0.5% last month, which is consistent with historical trends showing a 0.5% decline from October to November in the previous three years. National rents are now down 1.3% year-over-year.

Like Zumper, ApartmentList’s data shows rapidly decreasing rents in coastal cities, like San Francisco, Seattle and New York City. Affordable suburban cities have become more expensive during 2020.

In 27 of the nation’s 30 largest metropolitan areas, cities are experiencing faster rent drops than in surrounding suburbs, according to ApartmentList. In suburban cities, rents are 0.5% higher today than at the start of the year.