Cities where rent plummeted during the pandemic

Money

Written by:

 

In a year where staying at home has never been more of a priority, real estate markets across the U.S. have seen major fluctuations in demand, with the pandemic only furthering the divide between homeowners and renters. Cities across the country are displaying diverse responses to the COVID-19 pandemic and the economic shutdown that followed. While some large cities are doing relatively well at keeping case numbers flat and investing in the revitalization of local businesses, it’s undeniable that city living has become markedly different.

 

After attractive city features like bars and entertainment venues began operating at limited capacity or closed altogether during the pandemic, many city residents across the U.S. decided to call it quits on urban dwelling. Residents with the financial means to buy houses have been leaving cities in droves, ratcheting up home sales in suburban and rural areas. These large-scale urban exoduses have in turn changed city rental landscapes. In some cities where finding and securing an affordable rental was not for the faint of heart, the tables have turned: Rentals are in need of residents, and with comparatively low demand, their prices are dropping.

______________________

SPONSORED: Find a Qualified Financial Advisor

1. Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes.

2. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals get started now.

______________________

 

 

 

 

The meaning of home has never been more clear than in the wake of a global pandemic. The coronavirus has not only affected the housing and rental landscapes, but the rollout of these ramifications will likely be seen for years to come. To understand where the U.S. has seen some of the most drastic effects of COVID-19 in their real estate markets, the research team at Insurify looked at nationwide rent data to identify the cities with the most significant decreases in rent costs over the pandemic.

Methodology

The data science team at Insurify, a home insurance comparison site, studied Apartment List price estimates to identify the cities with the greatest pandemic rent declines. Apartment List is an online rental platform that releases monthly pricing data for rented units on both the state and city levels across the U.S.

 

To calculate the relative change in average rent prices for U.S. cities during the pandemic, Insurify’s data scientists took the relative percent change between the price of rent in March 2020 — when the first coronavirus shutdown occurred — and September 2020. Rent estimates for each city include studio and 1-4 bedroom units, so analysts took the average of the combined units’ relative percent changes to determine each city’s overall change over time. Apartment List provided the average cost of a 2-bedroom apartment in the U.S. as of September 2020 and the change in year-over-over prices.

Insights

  • National averages. Across all U.S. cities, the average percent change in rent between March and September 2020 was 0.067%, suggesting that prices overall remained relatively level. The mean cost of a 2-bedroom rented unit in September 2020 was $1,106. The average year-over-year price change in rent was -1.4%.
  • Lower rent, but at what cost? With the exception of the top three in the rankings, the cities that experienced the largest dips in rent prices over the course of the pandemic have a higher-than-average cost of overall living. Despite the relative decreases in rent costs these regions saw throughout 2020, renting a 2-bedroom apartment in 17 out of 20 of these cities cost at least 35% more than the national average (and, at most, 71% more).
  • California dreaming, for less. Half of the cities with the greatest drops in rent costs during the pandemic were in California, and nine of those ten cities were clustered by the Bay Area region of Northern California. The income distribution in these cities likely contributed to the high proportion of these NorCal metropolises represented on the list. San Mateo, Alameda, Santa Clara and San Francisco counties — where these cities are located — are all relatively high-income regions, where the median household income is at least 40% higher than the national average. Affluent residents of these cities likely followed the early waves of suburban flight, looking for a more spacious place to shelter-in-place and work from home. The increased supply of available housing was not met with equal demand, which contributed to driving down rent costs.

Insurify 2020 rent infograph

Cities with Greatest Pandemic Rent Drops

20. Boston

  • Average percent decrease in rent: -8.92%
  • Average rent for a 2-bedroom apartment (9/2020): $1,928
  • Change in rent year-over-year (2019-2020): -12.0%

19. Berkeley, California

  • Average percent decrease in rent: -9.14%
  • Average rent for a 2-bedroom apartment (9/2020): $2,181
  • Change in rent year-over-year (2019-2020):  -9.8%

18. San Jose, California

  • Average percent decrease in rent: -9.47%
  • Average rent for a 2-bedroom apartment (9/2020): $2,178
  • Change in rent year-over-year (2019-2020):  -9.8%

17. Bellevue, Washington

  • Average percent decrease in rent: -9.69%
  • Average rent for a 2-bedroom apartment (9/2020): $2,115
  • Change in rent year-over-year (2019-2020):  -7.9%

 

16. Seattle

  • Average percent decrease in rent: -9.88%
  • Average rent for a 2-bedroom apartment (9/2020): $1,940
  • Change in rent year-over-year (2019-2020):  -8.8%

15. Santa Monica, California

  • Average percent decrease in rent: -10.30%
  • Average rent for a 2-bedroom apartment (9/2020): $2,432
  • Change in rent year-over-year (2019-2020):  -11.1%

14. Tysons Corner, Virginia

  • Average percent decrease in rent: -10.71%
  • Average rent for a 2-bedroom apartment (9/2020): $2,043
  • Change in rent year-over-year (2019-2020):  -12.5%

 

13. Cambridge, Massachusetts

  • Average percent decrease in rent: -11.00%
  • Average rent for a 2-bedroom apartment (9/2020): $2,477
  • Change in rent year-over-year (2019-2020):  -12.8%

12. Foster City, California

  • Average percent decrease in rent: -11.42%
  • Average rent for a 2-bedroom apartment (9/2020): $3,757
  • Change in rent year-over-year (2019-2020):  -11.3%

11. San Mateo, California

  • Average percent decrease in rent: -11.53%
  • Average rent for a 2-bedroom apartment (9/2020): $3,007
  • Change in rent year-over-year (2019-2020):  -11.9%

10. New York City

  • Average percent decrease in rent: -11.57%
  • Average rent for a 2-bedroom apartment (9/2020): $1,790
  • Change in rent year-over-year (2019-2020):  -13.1%

9. Santa Clara, California

  • Average percent decrease in rent: -13.02%
  • Average rent for a 2-bedroom apartment (9/2020): $2,591
  • Change in rent year-over-year (2019-2020):  -11.4%

8. Union City, New Jersey

  • Average percent decrease in rent: –14.00%
  • Average rent for a 2-bedroom apartment (9/2020): $1,691
  • Change in rent year-over-year (2019-2020):  -9.5%

7. Redwood City, California

  • Average percent decrease in rent: -14.82%
  • Average rent for a 2-edroom apartment (9/2020): $2,703
  • Change in rent year-over-year (2019-2020):  -15.5%

6. Sunnyvale, California

  • Average percent decrease in rent: -16.37%
  • Average rent for a 2-bedroom apartment (9/2020): $2,383
  • Change in rent year-over-year (2019-2020):  -16.5%

5. Mountain View, California

  • Average percent decrease in rent: -16.68%
  • Average rent for a 2-bedroom apartment (9/2020): $2,655
  • Change in rent year-over-year (2019-2020):  -18.9%

4. San Francisco

  • Average percent decrease in rent: -17.81%
  • Average rent for a 2-bedroom apartment (9/2020): $2,592
  • Change in rent year-over-year (2019-2020):  -20.4%

3. Midland, Texas

  • Average percent decrease in rent: -20.67%
  • Average rent for a 2-bedroom apartment (9/2020): $912
  • Change in rent year-over-year (2019-2020):  -29.5%

2. Williston, North Dakota

  • Average percent decrease in rent: -24.45%
  • Average rent for a 2-bedroom apartment (9/2020): $840
  • Change in rent year-over-year (2019-2020):  -25.1%

1. Odessa, Texas

  • Average percent decrease in rent: -26.40%
  • Average rent for a 2-bedroom apartment (9/2020): $728
  • Change in rent year-over-year (2019-2020):  -34.1%

More from MediaFeed:

Best & worst cities for American renters

 

The COVID-19 pandemic has affected many aspects of Americans’ social and financial lives. Initial shelter-in-place mandates reduced mobility and resulted in enormous job loss that continues to cause hardship and impact the real estate and rental markets. Many consumers are searching for the best places to rent where they can find the greatest overall value.

 

For tenants who can work remotely, many haven’t renewed their leases for apartments in large cities. They’ve relocated to surrounding counties or smaller cities with the cheapest rent. As working from home becomes a new norm, getting an apartment with more space or more lavish amenities for the same or less rent is a welcome upgrade.

 

To determine which cities are the best and worst places to rent, we analyzed various affordability and apartment amenity data. Creating a ranking system, we gave cities with the cheapest rent and higher apartment quality higher scores than cities that are less favorable.

 

The study used data from the Department of Housing and Urban Development about cost-burdened renters, who pay more than 30% of their income for housing. The analysis included a rent-to-price ratio, comparing the median home value to the median annual rent; higher ratios indicate that renting is better than buying a home.

 

DepositPhotos.com

 

To determine which cities were the best and worst for renters, we looked at which cities had the best apartment quality and which cities were the most affordable for renters. We gave higher scores to cities that had higher apartment quality or were more affordable. Scoring was determined as follows:

 

Apartment quality — 30 points 

  • Percent of available units that have an in-unit washer, dryer and dishwasher — 10 points
  • Percent of available pet-friendly rentals — 10 points
  • Average size of a two-bedroom unit — 10 points

Affordability — 70 points 

  • Average rent for a two-bedroom — 20 points
  • Percent of household income spent on rent on average — 10 points
  • Year-over-year change in rent price — 10 points
  •  Share of cost-burdened renter households — 10 points
  • Rent-to-price ratio — 10 points
  • Regional price parity of goods — 5 points
  • Regional price parity of services — 5 points

The percentage of available units that have an in-unit washer, dryer and dishwasher, and the percentage of available rentals that are pet friendly was calculated based on the available listings for each city in RentCafe that were labeled as having each factor.

 

The Department of Housing and Urban Development defines cost-burdened renter households as families who pay more than 30% of their income for housing.

 

The rent-to-price ratio was calculated based on the median home value versus the median annual rent. In general, higher ratios indicate that it’s better to rent, while lower ratios suggest buying a home.

 

The cost of living in each city was approximated based on the regional price parity of goods and services in each city. The analysis was conducted by Finder.com.

 

Depositphotos

 

The following five cities had the highest scores for renters based on the factors listed. It’s not surprising that none are among the country’s largest cities.

 

DepositPhotos.com

 

Score: 61.2

  • Percent of available rentals with a washer, dryer and dishwasher: 28.5%
  • Percent of available pet-friendly rentals: 98.2%
  • Apartment size, two bedroom: 1,029 square feet
  • Average rent, two bedroom: $1,370
  • Percent of household income spent on rent on average: 27.6%
  • Historical rent price changes year over year: 8.7%
  • Share of cost-burdened renter households: 43.1%
  • Rent-to-price ratio: 16.3
  • Regional price parity of goods: 96.4
  • Regional price parity of services: 95.1

 

DenisTangneyJr

 

Score: 61.7

  • Percent of available rentals with a washer, dryer and dishwasher: 28.7%
  • Percent of available pet-friendly rentals: 100%
  • Apartment size, two bedroom: 1,063 square feet
  • Average rent, two bedroom: $1,330
  • Percent of household income spent on rent on average: 28.8%
  • Historical rent price changes year over year: 9%
  • Share of cost-burdened renter households: 47.2%
  • Rent-to-price ratio: 18.9
  • Regional price parity of goods: 96.6
  • Regional price parity of services: 95.1

 

istockphoto/Mark Howard

 

Score: 62.4

  • Percent of available rentals with a washer, dryer and dishwasher: 13.1%
  • Percent of available pet-friendly rentals: 93.8%
  • Apartment size, two bedroom: 998 square feet
  • Average rent, two bedroom: $1,080
  • Percent of household income spent on rent on average: 26.8%
  • Historical rent price changes year over year: 2.9%
  • Share of cost-burdened renter households: 41.7%
  • Rent-to-price ratio: 16
  • Regional price parity of goods: 95.3
  • Regional price parity of services: 91.3

 

Pixabay.com

 

Score: 62.8

  • Percent of available rentals with a washer, dryer and dishwasher: 22.7%
  • Percent of available pet-friendly rentals: 99.8%
  • Apartment size, two bedroom: 1,004 square feet
  • Average rent, two bedroom: $1,000
  • Percent of household income spent on rent on average: 27.9%
  •  Historical rent price changes year over year: 4.2%
  • Share of cost-burdened renter households: 44.6%
  •  Rent-to-price ratio: 15.3
  • Regional price parity of goods: 96.6
  •  Regional price parity of services: 90.5

 

istockphoto/Sean Pavone

 

Score: 64.9

  • Percent of available rentals with a washer, dryer and dishwasher: 11.8%
  • Percent of available pet-friendly rentals: 100%
  • Apartment size, two bedroom: 1,090 square feet
  • Average rent, two bedroom: $1,100
  • Percent of household income spent on rent on average: 28%
  • Historical rent price changes year over year: 5.8%
  • Share of cost-burdened renter households: 44.5%
  •  Rent-to-price ratio: 16.9
  • Regional price parity of goods: 94.6
  •  Regional price parity of services: 92.2

 

 

Matt Bills / iStock

 

The following five cities had the lowest scores.

 

 

dcsliminky / istockphoto

 

Score: 43.8

  • Percent of available rentals with a washer, dryer and dishwasher: 27.5%
  • Percent of available pet-friendly rentals: 69.6%
  • Apartment size, two bedroom: 980 square feet
  • Average rent, two bedroom: $1,700
  • Percent of household income spent on rent on average: 32.5%
  • Historical rent price changes year over year: -1.2%
  • Share of cost-burdened renter households: 54.7%
  • Rent-to-price ratio: 14.6
  • Regional price parity of goods: 100.1
  • Regional price parity of services: 108.5

 

istockphoto/vichie81

 

Score: 43.1

  • Percent of available rentals with a washer, dryer and dishwasher: 13.1%
  • Percent of available pet-friendly rentals: 93.8%
  • Apartment size, two bedroom: 913 square feet
  • Average rent, two bedroom: $1,860
  • Percent of household income spent on rent on average: 31.6%
  • Historical rent price changes year over year: 12%
  • Share of cost-burdened renter households: 53%
  • Rent-to-price ratio: 22.1
  • Regional price parity of goods: 98.2
  • Regional price parity of services: 102.2

 

 

DepositPhotos.com

 

Score: 39.8

  • Percent of available rentals with a washer, dryer and dishwasher: 0%
  • Percent of available pet-friendly rentals: 86.8%
  • Apartment size, two bedroom: 1,030 square feet
  • Average rent, two bedroom: $2,800
  • Percent of household income spent on rent on average: 33.8%
  • Historical rent price changes year over year: -5.7%
  • Share of cost-burdened renter households: 57.2%
  • Rent-to-price ratio: 27.7
  • Regional price parity of goods: 105.7
  • Regional price parity of services: 106.9

 

DepositPhotos.com

 

Score: 38.6

  • Percent of available rentals with a washer, dryer and dishwasher: 0%
  • Percent of available pet-friendly rentals: 24.2%
  • Apartment size, two bedroom: 906 square feet
  • Average rent, two bedroom: $1,010
  • Percent of household income spent on rent on average: 30.8%
  • Historical rent price changes year over year: 12.2%
  • Share of cost-burdened renter households: 52.2%
  • Rent-to-price ratio: 17.1
  • Regional price parity of goods: 93
  • Regional price parity of services: 99.2

 

tonda / istockphoto

 

Score 38.4

  • Percent of available rentals with a washer, dryer and dishwasher: 27.6%
  • Percent of available pet-friendly rentals: 99.8%
  • Apartment size, two bedroom: 1,016 square feet
  • Average rent, two bedroom: $2,360
  • Percent of household income spent on rent on average: 35.6%
  • Historical rent price changes year over year: 2.2%
  • Share of cost-burdened renter households: 62.6%
  • Rent-to-price ratio: 13
  • Regional price parity of goods: 103.5
  • Regional price parity of services: 105.8

 

 

espiegle/istockphoto

 

How does your city compare when it comes to finding the best places to rent?

  1. Cheapest rent in America: Renters in Akron, Ohio, pay an average of $750 for a two-bedroom apartment.
  2. Most expensive rent in America: Renters in San Francisco pay an average of $3,750 for a two-bedroom apartment.
  3. Cost burden: Renters in Miami have the highest number of households — 62.2% — paying more than 30% of their income for housing. While San Francisco has the highest rent, it ranks the least cost burdened due to the relatively high income of residents.
  4. Drops in rent: Analysis shows that Minneapolis had the greatest change in average rent from the previous year, a 19.4% drop.
  5.  Pet friendly: Renters in Omaha enjoy the most pet-friendly housing, allowed by 100% of apartments on average.

 

DepositPhotos.com

 

Choosing to buy a home versus renting is a decision that has to be weighed carefully. On the one hand, getting a mortgage to purchase a home can be a wise financial move. But on the other hand, renting can be an excellent way to build wealth depending on your situation and financial goals.

 

Some upsides of owning a home include:

  • Building equity that you can cash out by refinancing your mortgage or selling your property
  •  Having price appreciation over time, depending on factors in your local market
  • Cutting taxes by claiming allowable deductions for mortgage interest, points and property taxes — up to certain annual limits
  • Avoiding up to $250,000 — or $500,000 for taxpayers filing jointly — of capital gains tax when selling a home after living in it for a period
  • Paying historically low mortgage interest rates

When you rent, you don’t qualify for housing-related tax deductions. However, you may not have additional expenses that typically come with homeownership. The benefits of renting include:

  • Not having to pay a sizable down payment or have as much income to buy a home
  • Paying average rent in the U.S. is less per month than buying in some areas of the country, such as large cities
  • Avoiding the expense and hassle of ongoing home maintenance and repairs
  • Being protected from economic downturns, such as a recession or a real estate price bubble that pops
  • Having the flexibility to relocate quickly for your family or work

Getting a mortgage is a significant financial commitment that must fit your lifestyle and financial goals, such as investing for retirement and paying off debt. Many economic and nonfinancial considerations may factor into your decision to buy or rent a home.

 

The bottom line is that if buying a home has more advantages, finding an affordable property in a city with cost-effective living expenses is key. However, if renting is more suitable for your lifestyle and budget, choosing a place to rent in one of the best cities on our list might lead to big savings.

 

Related:

This article originally appeared on Finder.com and was syndicated by MediaFeed.org.

 

Depositphotos

 

Featured Image Credit: SeventyFour/ iStock.

AlertMe