Cities where rent plummeted during the pandemic

November 12, 2021

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.

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.