National rents continued their downward trend in May, reaching their lowest year-over-year level since February 2011, according to the latest report from Yardi Matrix.
During what would typically be prime leasing season, rents decreased by 0.3 percent on a month-over-month basis.
Nationwide, rents have declined by $13 over the past two months, the company reported.
Fall could become the rental season
“This rapid decline will likely continue through the summer as the nation continues to practice social distancing. As some unemployed (people) slowly return to work in the coming months, the fall could become this year’s rental season,” Yardi Matrix said in the report.
Rent collections nationally in May were still reasonably strong with 93 percent of households “paying some rent,” according to the National Multifamily Housing Council.
“With the extra $600 per week in unemployment benefits set to run out at the end of July, it remains to be seen how renters will fare if the extra assistance is not extended. A decline in collections seems imminent, but as of right now, renters are prioritizing their rent payments.”
“If rents continue this rapid downward trend, we could be looking at alarming numbers by the end of the summer,” the report said.
“The reason numbers could get worse is that the CARES Act currently provides an additional $600 a week in unemployment benefits on top of the standard state payment, but this is set to expire at the end of July unless another stimulus bill is passed.
“The HEROES Act was passed by the House of Representatives on May 15 and proposes to extend the extra unemployment benefits through January 2021, among other provisions. The $3 trillion HEROES Act will likely face significant opposition in the Senate. The extra $600 a week is a necessity for many Americans to pay their bills, most notably rent, and if it does run out, we could see rent collections decline rapidly,” the report says.
Month-over-month, the markets with the most severe declines include:
- Houston -0.9 percent
- San Jose -0.9 percent
- Seattle -0.8 percent
- Nashville -0.8 percent
Seattle, San Jose and Orange County were among the first markets to impose stringent lockdowns. Seattle only planned to enter Phase 1 of reopening on June 5.