Densely populated coastal cities took a hard hit during the pandemic, as residents learned they could work remotely and took the opportunity to move to less pricey markets with more breathing room.
Rents dropped precipitously in these markets over the course of several months, with median one-bedroom rents down 23.4 percent in San Francisco from March 2020 to January 2021. During the same period, median one-bedroom rents dropped 16.7 percent in Oakland, 16.5 percent in San Jose, 14.3 percent in Seattle and 13.8 percent in Los Angeles.
Over the course of 2021, East Coast rents made steady gains while West Coast rents remained stilted — until just recently, a new report from Zumper released on Tuesday revealed.
“Zumper’s October data shows that rents in many of those cities are rising again, suggesting that people are returning and life is getting back to something resembling normal,” the report states.
In Los Angeles, for instance, the median one-bedroom rent is now only down 4.9 percent compared to March 2020. Likewise, Seattle is just down by 3.8 percent from that time period, and San Jose down by 9.4 percent.
Meanwhile, in Anaheim, where one-bedroom rents largely remained steady between March 2020 and January 2021, the median one-bedroom rent is now up a whopping 12.7 percent from March 2020, and in Portland (where rents also stayed relatively flat) the median one-bedroom rent is up 5.7 percent from the same period.
San Francisco, on the other hand, remains an outlier among these markets, with the median one-bedroom rent still down 20 percent from March 2020, a place its held for the last three months.
Nationwide, rapid rent growth continues to hinder affordability for some. Since March 2020, the median one-bedroom rent has increased by 11.8 percent while the median two-bedroom rent has risen by 14.3 percent.
Quick rebounds in some coastal cities, like New York, where the median one-bedroom rent was down 17.5 percent in January compared to March 2020 and now 8.8 percent higher than March 2020, are helping to contribute to overall national rent increases, Zumper reported. In addition, surging home prices in the for-sale market have pushed a larger portion of the population with higher incomes into the rental market, driving up prices, and sometimes leading to rental bidding wars.
On top of those factors, material costs and supply chain disruptions that are hindering builders and preventing them from keeping up with housing demand also filter down to impact the rental market, Zumper noted. But, rising rents may just be working on catching up to those surging home prices.
“Another thing to consider is that home prices and rent usually move together,” the report stated. “Now in the fall of 2021, rent is continuing to rise even as home price growth has started to level off. It’s possible that the rapid rise in rent is just rent catching up to home prices, and when it reaches a new equilibrium point, rent could level off just as home prices have.”
Unlike a number of Mountain West and Southwestern markets that saw surging rent growth earlier in the pandemic as coastal rent growth tanked, Denver’s rental market behaved much like a coastal city’s. As of January 2021, the city’s median one-bedroom rent was down 6 percent from March 2020. But today, Denver’s median one-bedroom rent is up 13.4 percent from March 2020.