Since the beginning of the pandemic, rents have only fluctuated by a few dollars each month – contrary to what many in the multifamily markets initially feared, according to Yardi Matrix.
“However, there are significant rent variations at the metro level, and given a lack of government stimulus and ongoing layoffs, the fall and winter months will be telling,” Yardi Matrix says in its September report.
“As we move into the fall and winter months, the return to normal remains slow and volatile. Political disruptions are causing further uncertainty, and consumer confidence fell to its lowest level in more than six years in August.
“In September, the unemployment rate declined to 7.9 percent, but there are still more than 12 million people unemployed. With the extreme uncertainty surrounding the country today, the multifamily industry has held up better so far than many predicted,” the report says. In addition:
- Multifamily markets rents decreased by a dollar in September, to $1,463. Since the beginning of the pandemic, overall rents have only been up or down by a few dollars each month. Many initially feared that the decline would be much steeper than the $8.00 overall national rent decline since February.
- However, there are significant rent variations at the metro level. Higher-cost metros that have had some of the highest rents this cycle have seen dramatic declines. San Jose (-6.6 percent) and San Francisco (-5.8 percent), the two metros with the largest year-over-year declines in September, have seen overall rents decline by $205 and $136, respectively, since February.
- The two best-performing metros in September for year-over-year rents, the Inland Empire (3.4 percent), and Sacramento (3.1 percent), have seen overall rents increase by $35 and $37, respectively, since February.
“The commonality among the top-performing metros is their lower cost of living,” the report says.
Cautions about the labor market and permanent job losses
Yardi Matrix cautions to watch the labor market going forward.
“While the unemployment rate continues to improve, another metric to keep an eye on is the number of permanent job losses. In September, the number of permanent job losses increased by 345,000 to 3.8 million; this measure has increased by 2.5 million since February.
“Among the unemployed, the number of people on temporary layoff decreased by 1.5 million in September to 4.6 million.
“As furloughs inevitably become permanent job losses, the economic recovery remains at risk,” the report says. “Eight months into the pandemic, with little aid in sight, companies are being forced to make tough staffing decisions.”
About Yardi Matrix
Yardi Matrix is a leading source for originating, pre-underwriting and managing assets for profitable loans and investments. Yardi Matrix Multifamily provides accurate data on 18+ million units, covering over 90% of the U.S. population.