Rent growth accelerates for the second straight month
An analysis of rent prices nationwide revealed that rents grew by the largest margin since the summer of 2019, with rents stabilizing in metros heavily affected by the pandemic.
The Apartment List national report found that rents increased by 0.7% from January 2020 to February 2020, marking the biggest monthly gain since June 2019, when the market was in the middle of its summer boom. The increase is more than double the average 0.3% month-over-month rent growth in February in the past three years. This is also the second consecutive month that rent growth has outpaced the average of previous years.
“Our national index has not been significantly disrupted since the early stages of the pandemic,” Apartment List wrote in the report. “Rents fell by 1.2% nationally from March through June of 2020, but rents are now just 0.1% lower than they were last June. Over the past eight months, national rent growth has been largely in line with the seasonal trend that we’ve observed in prior years.”
During the pandemic, pricey coastal metros saw rent prices plummet while some mid-sized markets experienced rapid rent increases. But the report showed signs that rents in hard-hit cities are starting to recover, and booming markets are continuing to see prices soar, thanks to the stability in the national index.
For example, San Francisco posted its first monthly increase since the onset of COVID-19. While it is still far from returning to pre-pandemic levels, the expensive city reported a 1.2% month-over-month gain in February. Boston and eight other cities with the sharpest declines are also experiencing a similar trend. Rents in Boston spiked by 3% - the largest gain among the nation’s 100 largest cities. Even New York City, the only market on this list where rents continued to dwindle, saw an improvement this month. Its monthly decline was just 0.1%, compared to the average 2.4% in the last nine months.
On the flip side, rent growth in several mid-sized markets accelerated as they became the target of city dwellers in need of more space during the pandemic. Boise topped the list of the markets with the fastest annual growth and was the city 4th largest monthly increase. Rents in Boise grew 1.8% month over month and are up by 13.5% year over year.
“This month’s data indicates that the markets where rents have been falling rapidly have reached a turning point. The booming markets are still seeing prices rise, but in many cases, that growth is flattening somewhat. While remote work and economic fallout of the pandemic will undoubtedly continue to impact local rental markets going forward, the way that these trends continue to play out may now start to become more nuanced and gradual,” Apartment List said.
