The pandemic is impacting rents now and negative rent growth year-over-year is showing up in statistics across the country for the first time since 2010, according to Yardi Matrix.
“Since January, U.S. multifamily average rents have declined by $12. A few months ago, many were hopeful that economic expansion would return by July, but with a rise in cases in many southern states, the economic recovery will likely be pushed out further than many initially hoped,” the report said.
“Given the rapid decline in rents since March, we may not see positive year-over-year rent growth for the remainder of 2020.”
Highlights of the report:
- Multifamily rents decreased by $2 in June, falling to $1,457, continuing the four-month trend of negative rent growth. Year-over-year growth turned negative for the first time since December 2010, falling to -0.4 percent, a 70-basis-point decline from May.
- Average U.S. rents declined by 0.8 percent in the first half of 2020 and 0.4 percent in the second quarter. This is a stark contrast from 2.6 percent rent growth in the first half of 2019 and 1.2 percent growth in the second quarter. Rent growth typically slows down in the second half of the year, but we could see a reversal of that trend if the fall becomes the new leasing season.
- West Coast and tech hub markets were among the hardest hit in the first half of 2020. Since the beginning of the year, rents are down 4.6 percent in San Jose and 3.8 percent in San Francisco. On the other hand, more affordable California markets like Sacramento (2.2 percent) and the Inland Empire (2.9 percent) have held up relatively well. The ability to work remotely and the desire to live in a less densely populated area are likely contributing to the strength of the latter two California markets.
Yardi Matrix said another stimulus package “seems even more likely now than it did a month ago, as coronavirus cases continue to skyrocket in many Southern states and the economy doesn’t recover as quickly as many had hoped.
“Second quarter GDP is scheduled to be released by the end of July, as well. Estimates currently range from -30 percent to -50 percent. The passage of another stimulus package could help to boost spending for the second half of the year.
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.