âFrom what I’ve read, the apartment market is recovering,â says Gay Cororaton, senior economist and director of Housing & Commercial Research at the National Association of REALTORSÂ®.
The pick-up in rents appears to be a good sign for several urban markets that have resisted pandemic-induced migration to the suburbs amid remote working conditions and nationwide shutdowns.
A recent report from realtor.comÂ® found that rent prices in the country’s 50 largest metropolitan areas climbed 2.7% year-over-year in April – the fastest growth since March 2020 – showing signs of a possible rebound for cities as the pandemic subsides.
As nationwide vaccinations advance and an office return to work looms on the horizon, urban markets could experience a boom in demand for tenants who did not exist during the height of the pandemic.
âWhile most allow employees to work from home full time, this will have a greater effect on migration out of cities,â Cororaton said. âIf most of the workers return to offices, I don’t think we’ll see a huge effect on migration. “
While the markets are already showing promising signs, Cororaton anticipates a full rebound by the second half of 2022.
Recovery of technological hubs
The cities that tech companies have called home have a long way to go before they return to their pre-COVID normalcy, but it looks like they are on the right track.
Rents at tech hubs fell last year due to remote work policies, but agents say announcements from tech companies like Facebook that an office comeback is on the horizon could change that.
âPeople are going to go back to their offices, so I’m seeing roommates coming back to where we had none of this during the pandemic,â says San Francisco-based agent Dawn Cusulos at Corcoran Global Living in California.
In April, the median rent in San Francisco was $ 2,656, down 10.9% from the same period in 2020, according to reports from realtor.comÂ®. According to Cusulos, this appears to be boosting rental activity in its market.
She says she closed nine leases in a single week, which is more than she traditionally expected in a month.
âThere is a sense of urgency because they still want to make a deal because the prices have come down,â Cusulos said. “Everyone’s trying to get something for a good price before things go back up.”
The Austin market was among the major rental markets that saw rents rebound, according to reports. Rent came out of a decline in April, with the median rent standing at $ 1,370 in April, up 1.7%.
An upturn in employment and a coveted real estate market could bode well for the rental business, according to agent Jordan Peters, at JP & Associates REALTORSÂ®.
âI think there will definitely be more leasing,â says Peters. âWith limited houses to buy, people are going to be forced to rent. I’ve had a lot more leases, and I feel like that could be a trend for 2022. â
According to Peters, the supply of rental housing in Austin was hit a bit last February after severe snowstorms left many apartments in need of repair.
This may not dampen demand, as Peters says extremely thin inventory and soaring home prices in the housing market could turn some budding buyers into renters.
Living in a big city
While tenants may have fled major cities amid pandemic-induced closures, experts in the Northeast say they are seeing a rebound in demand as metropolitan areas regain their pre-pandemic hustle and bustle. .
âYou live in the city because of the value of the entertainment, the social aspects, etc. Explains Gary Malin, COO at The Corcoran Group. âDuring the pandemic these things clearly weren’t there, so when all of a sudden you don’t need to work from the office so much and all aspects of the city aren’t open to you, it just doesn’t hold water. that’s why people left town.
As the pandemic subsides and the city reopens, Malin says there has been increased activity and renewed enthusiasm among tenants as unit prices remain below their pre-COVID levels.
The median rent in New York is $ 2,350, which is virtually unchanged over the past 12 months. However, Malin says rent concessions offered by landlords coupled with a return to social normalcy continue to make renting in the city attractive.
âI think people are realizing that the deals that are there now won’t last long as the city opens up and more rentals continue,â Malin said, adding that he anticipated a strong rental market performance over the next two months before a slowdown in the fall and winter.
When it comes to Boston’s rental market, things already appear to have turned around, according to Nick Warren, founder and CEO of Berkshire Hathaway HomeServices Warren Residential.
âI wouldn’t have predicted this based on the extra inventory we had at the start of this year,â Warren said, adding that the Boston rental market had up to 300% more inventory from the start. 2021 than for the whole of 2020.
âWe had this glut of inventory that I thought was going to completely shake up the rental market, and it worked for a little while,â Warren continues. âSuddenly about a month ago we saw things change completely and somehow the properties started to absorb quickly.
According to Warren, reports from his agents who had rental listings in the city showed they were getting so many inquiries that they started holding open houses for rentals to handle all the demand.
In some cases, agents also get offers above the asking price for the units as people compete for accommodation. Warren attributed the binge to a mix of factors, including people who stayed put during the pandemic while others entered the buyer’s market or left town.
“I think people have short-term memories, so as soon as there was light at the end of the tunnel, things started to go back to normal in the city, and I think that’s it. that happened, “says Warren, adding that once vaccines became available to the general population and cities began to reopen, there was a flood of people who returned to the market.
Uncertainties remain about a full recovery of urban rental markets nationwide. While companies like Facebook and Uber are planning and starting office returns, other large employers like Google are moving to hybrid schedules or expanding their options for workers.
The rebound will depend heavily on how businesses implement back-to-office policies in the months to come.
Jordan Grice is the Associate Content Editor of RISMedia. Send him your ideas for real estate news by email at [email protected].