Year-End Report 2020: Rental Season Delayed and Cut Short, Gen Z Renters Overtake Gen X, and Big City Rents Drop

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Highlights:

  • Renting activity was 10% slower in 2020, with a shorter rental season that started with a two-month delay 
  • Gen Z overtook Gen X and is the only renter generation that became more active this year
  • 18 of the 30 largest U.S. cities saw more renters leaving compared to last year
  • Apartment rents decreased in all top 10 most expensive cities for renters in 2020

This tumultuous year has changed renting in more than one way. Despite a slowdown in renting activity and an unusually short peak rental season, the past year has revealed just how adaptable apartment leasing can be. Virtual and self-guided tours are now commonplace when it comes to apartment viewing, and renters have unprecedented access to zero-face-to-face-interaction technology, from searching for apartments to signing a lease and managing their rental.

We are also witnessing important changes in the fabric of the rental market. A new cohort of renters, Generation Z, is now the second most active group of renters, overtaking Gen X-ers, while the front-runner generation of Millennial renters is shrinking. In terms of moving, there was an increase in renters who decided to move out of some large cities in 2020, including Detroit, New York and Seattle. And finally, 2020 was the year when rent prices fell in all of the nation’s ten most expensive large cities for renters, with San Francisco, New York, Boston and Seattle in the lead.

To get a comprehensive overview of the new renting trends of 2020, we extracted in-depth market and demographic insights by analyzing 5.8 million renter applications nationwide from RentGrow and rent data from Yardi Matrix.

The Outbreak of COVID-19 Delayed Peak Rental Season by Two Months

Typically, the busiest renting season — when renters are most active and moving to new apartments — begins in March and lasts until August. However, the 2020 rental season started with a two-month delay, kicking off in May with a 27% monthly increase in renter activity. Simultaneously, the moving season was cut short, lasting for only two months, as renter movement dropped by 13% as soon as July. 

By comparison, in the previous two years, renting activity accelerated in March (by 23%) and slowed down five months later, in August, by an average of 9%. These trends show that not only was moving season delayed and shortened in 2020, but that renter movement was concentrated over the months of May and June, with a sharp initial rise in renters on the move and a sudden drop at the end of that period. 

The pandemic had another overall effect on this year’s renting activity – more people decided to stay in their current apartments. 10% fewer renters applied for new apartments this year, breaking a years-long trend of single-digit increases. This is in line with the findings of a renter survey conducted on rentcafe.com in April of this year, when 11% of renters said they are staying put when asked about their plans to move during the pandemic. 

Gen Z Overtook Gen X and is the Only Renter Generation to Become More Active This Year

Gen Z renter activity surpassed Gen X in 2020, making it the second most active renter generation after Millennials. 23% of this year’s renter movement is owed to Generation Z, up from 12% two years ago, while Gen X now makes up 18% of moving renters, down from 20% in 2018. 

The Gen Z renter segment is the only one to see an upward trend in movement in the past three years, as the share of rental applications from all other generations has been shrinking. Millennials, the largest renter generation, now make up 47% of renters on the move, after accounting for more than half of renting activity in the past two years. 

Renter Income Stagnated for the First Time in Three Years 

Renters’ median income ground to a halt this year, following a two-year upward trend. In 2018, the median renter income increased by 1.5%, reaching $36,552. The next year, incomes rose even faster, by 5.1%, to $38,400. This year, renters’ salaries stagnated at around $38,400, the same as in 2019. 

Renters in the middle-income brackets were the only ones who moved more in 2020 than the year before. The share of renters on the move who earn between 25K to 75K rose by 5.9% since last year, while renters in the 50K-75K income bracket were 1.4% more active this year. However, renting activity dropped for all other income brackets, spearheaded by wealthy renters, who moved 7.6% less compared to last year.

Renter Activity Dropped in More Than Half of the Nation’s Largest Cities

The pandemic hindered moving plans in 16 of the nation’s 30 largest cities, as the number of applications for apartments in these hubs went down compared to the previous years.

Memphis saw the most pronounced downturn, a significant 21% drop in rental applications to and from the city. Meanwhile, 16% fewer renters moved in Chicago, the second fastest decline. Louisville comes in third, with a 11% decrease in renters on the move compared to 2019. 

18 of the 30 Largest U.S. Cities Saw More Renters Leave This Year

We looked at renter activity from three angles: renters moving out of a particular city, renters moving within a city, and renters moving into a city. There has been much speculation around the topic whether people are leaving dense large cities for more space elsewhere in the context of the pandemic. As far as renters are concerned, this trend confirms for a handful of the nation’s largest cities. This year, 18 of the 30 largest U.S. cities saw more renters leaving compared to 2019. Furthermore, half of the largest cities registered more pronounced activity in terms of renters moving out of the city rather than renters moving in. 

Changes in Renting Activity in the Top 30 Largest U.S. Cities

City Leaving city Moving within city Moving into city
Detroit, MI 36% -7% -13%
Oklahoma City, OK 34% 0% -4%
New York, NY 25% 5% -7%
Jacksonville, FL 20% 0% 3%
Fort Worth, TX 17% 8% 7%
Seattle, WA 15% -14% -24%
San Francisco, CA 11% -1% -31%
Memphis, TN 10% -28% -11%
Phoenix, AZ 9% -8% -1%
Baltimore, MD 6% -6% -1%
Dallas, TX 5% -13% -4%
Las Vegas, NV 5% -9% 0%
Nashville, TN 4% 4% -1%
Chicago, IL 4% -24% -3%
Portland, OR 3% -6% -8%
Charlotte, NC 2% 10% 22%
Philadelphia, PA 1% 17% 4%
Denver, CO 1% 14% 16%
Indianapolis, IN 0% -1% -4%
Washington, D.C. -2% -13% -7%
San Antonio, TX -2% 0% 0%
Los Angeles, CA 3% 5% -1%
Columbus, OH -3% 23% 13%
Houston, TX -3% 2% 4%
San Diego, CA -4% -13% -1%
Boston, MA -6% 8% 13%
Louisville, KY -10% -13% -9%
Austin, TX -12% 5% -6%
San Jose, CA -14% 55% 16%
El Paso, TX -17% 11% 30%

Detroit saw the fastest rise in renter movement out of the city, a 35.7% increase in renters moving out since last year, as well as a 13% drop in renters moving in. Oklahoma City closely follows, as 34.2% more renters left the city in 2020, and 3.5% fewer moved in. Meanwhile, New York ranks third with a 25.1% increase in renters moving out. Other notable large cities where more renters moved out in 2020 than in previous years are Seattle and San Francisco. 

Rates Dropped in All of the Top 10 Most Expensive Large Cities for Renters 

The national average rent stagnated this year at $1,465 as of November. Rents decreased or stagnated in 18 of the 30 largest U.S. cities, and increased in 13. 

Rent Prices in the 30 Largest U.S. Cities

City 2020 Average Rent 2019 Average Rent Change Y-o-Y
San Francisco, CA $3,055 $3,695 -17.3%
Manhattan, NY $3,761 $4,215 -10.8%
Seattle, WA $1,966 $2,148 -8.5%
Boston, MA $3,144 $3,429 -8.3%
Chicago, IL $1,794 $1,955 -8.2%
San Jose, CA $2,531 $2,742 -7.7%
Washington, D.C. $2,083 $2,234 -6.8%
Los Angeles, CA $2,359 $2,503 -5.8%
Austin, TX $1,372 $1,442 -4.9%
Portland, OR $1,493 $1,542 -3.2%
Nashville, TN $1,399 $1,431 -2.2%
Denver, CO $1,636 $1,672 -2.2%
San Diego, CA $2,201 $2,237 -1.6%
Philadelphia, PA $1,643 $1,653 -0.6%
Houston, TX $1,108 $1,106 0.2%
Dallas, TX $1,247 $1,243 0.3%
San Antonio, TX $1,058 $1,050 0.8%
Louisville, KY $994 $978 1.6%
Charlotte, NC $1,286 $1,256 2.4%
Oklahoma City, OK $805 $784 2.7%
Columbus, OH $979 $952 2.8%
El Paso, TX $812 $789 2.9%
Baltimore, MD $1,312 $1,274 3.0%
Detroit, MI $1,102 $1,068 3.2%
Fort Worth, TX $1,171 $1,132 3.4%
Las Vegas, NV $1,150 $1,110 3.6%
Indianapolis, IN $933 $894 4.4%
Jacksonville, FL $1,162 $1,111 4.6%
Memphis, TN $863 $819 5.4%
Phoenix, AZ $1182 $1120 5.5%

The sharpest drops took place in the nation’s most expensive cities for renters. San Francisco’s average rent saw the fastest yearly decrease, plummeting to $3,055 after a 17.3% yearly drop. Manhattan, New York ($3,761) comes in second with a 10.8% rent decrease, which pushed its average rate below the $4,000 mark for the first time in years. Seattle saw prices drop the third fastest, by 8.5%, while Boston dethroned San Francisco as the nation’s second most expensive city for renters despite a 8.3% yearly drop in prices. 

Phoenix’s average rent ($1,182) is still going strong, registering the most significant yearly surge among the nation’s 30 largest cities, 5.5%. At the same time, Memphis saw a 5.4% surge which pushed its average rent up to $863.

Methodology

  • Rent prices were sourced from Yardi Matrix, a business development and asset management tool for brokers, sponsors, banks and equity sources underwriting investments in the multifamily, office, industrial and self-storage sectors. The data on average rents comes directly from competitively-rented (market-rate) large-scale multifamily properties (50+ units in size), via telephone survey.
  • Rental application data was sourced from RentGrow, Inc. and was received completely anonymized and aggregated. No personally identifiable or other confidential renter information was disclosed or used in conjunction with this article. 
  • The top 30 largest U.S. cities are ranked by population, according to the U.S. Census Bureau’s 2019 ACS 1-year estimate. 
  • Analysis is based on data from 5.8 million rental applications from RentGrow, Inc. for approximately 37,000 apartment communities. We included only properties which had available data for all years pertinent to the analysis.
  • Gen Z are defined as the generation born between 1997 and 2012, Millennials are defined as the generation born between 1981 and 1996, Gen X as those born between 1965 and 1980 and Baby Boomers as those born between 1946 and 1964.

 

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