The pandemic continues to burden multifamily rental housing as rents continue to fall and more pain is coming, Yardi Matrix says in their U.S. Multifamily Outlook for winter 2021.
‘After a year ravaged by a global pandemic and political division, nothing would be more satisfying in 2021 than a return to normal” … but “it will take some months to get most of the country vaccinated and get businesses operating as normal,” the report says.
“Despite the COVID-19 pandemic, national rent growth remained relatively flat on a year-over-year basis, ending the year at -0.8 percent. There was a large divergence in performance between markets, though. High-cost gateway markets struggled the most, while many tech hub and tertiary markets thrived,” the Yardi Matrix report says. Some highlights of the report:
- “Job growth has been mostly positive since the summer, but the economy remains nearly 10 million jobs off its peak.
- “Nationally, rent growth fell only slightly in 2020, but there was a huge variation among metros. Rents and occupancy levels fell sharply in high-cost gateway markets, as renters left crowded and expensive coastal centers. More affordable markets in the Sun Belt, Southwest, Midwest and Mid-Atlantic saw modest rent growth.
- “The pandemic slowed construction. With more than 750,000 units under construction, new supply should stay in the 300,000 range for a few years.
- “We expect 2021 to be better than 2020, particularly the second half, but the year won’t be without tumult. Gateway markets will continue to struggle, and the industry will have to deal with weak rent collections, eviction bans, forbearance requests, lobbying for renter aid and a new federal mortgage oversight regime,” Yardi Matrix says in the report.
Rent payment concerns for rental housing
Yardi Matrix said although rents held up better than expected in 2020, considering the circumstances, the market has issues to work through. One is the rate of collections. With the excessive job losses caused by COVID-19, many forecasted a decline in rent payments. For the most part, that hasn’t materialized, as tenants have prioritized their rent payments.
However, rent payments did decline slightly at year-end as federal aid wound down. According to the National Multifamily Housing Council’s Rent Payment Tracker, 93.8 percent of apartment households paid rent by the end of December—down 2.1 percentage points from December 2019.
“There is hope for a strong economic recovery as 2021 proceeds, but much of that hope will depend on the pace of vaccine adoption and the reopening of businesses nationwide. In the early stages, the vaccine rollout appears to be lagging initial expectations; however, a new presidential administration and an organized national effort for vaccine deployment may increase the speed of the recovery,” the report says.
Exodus from Gateway Markets Drives Rent Declines
About Yardi Matrix:
Yardi Matrix researches and reports on multifamily, office and self-storage properties across the United States, serving the needs of a variety of industry professionals. Yardi Matrix Multifamily provides accurate data on 18+ million units, covering more than 90 percent of the U.S. population. Contact the company at (480) 663-1149.
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