Apartment Rents Rebound in Tech Hubs
Last month, median rent rose 2.7% year-over-year in the largest 50 metro areas, according to realtor.com.
The median rent increase to $1,483 was just below the 3.2% pre-COVID growth rate in March 2020.
In major tech hubs, rents fell 5.4% year-over-year in April. However, that marked an improvement compared to the 6.6% those markets tallied earlier in February. From March to April, rents rose 1.1% to $2,086 in these tech centers.
While tech centers like San Jose, Calif. (-12.5%), San Francisco (-10.9%), and Seattle (-7.3%) are still experiencing declines, those are lessening, especially for two-bedroom apartments, according to realtor.com. In Denver and Austin, rents have risen 2.2% and 1.7%, respectively, year-over-year.
“In tech centers, rent declines are getting smaller, signaling they are on the path to turnaround, said realtor.com Chief Economist Danielle Hale in prepared remarks. “If the trend continues, renters could expect to be paying pre-pandemic rates by as early as this fall.”
Still, Hale says the largest growth is occurring outside of major cities. The leaders in April rent growth were Riverside and Sacramento, which posted 15% and 13.6% year-over-year gains, respectively. Realtor.com attributes their success to relatively affordable median rental prices, of $1,950 and $1,704, respectively, compared to neighboring Los Angeles and San Francisco. Memphis and Tampa were also strong performers, growing by 12% compared to last year.
Two-bedroom apartments are performing especially well, rising 5.2% year-over-year and surpassing their pre-COVID growth rates, up 5.2% to $1,662. By comparison, two-bedroom rents were growing 3.5% year-over-year in March 2020.
In some cities, those two-bedrooms rates are a lot higher. In Charlotte, the price for those units is up 11% year-over-year, while Boston is almost 4% less than a year ago.
Realtor.com attributes the strength of these larger units to renters’ preference space as they work from home during the pandemic. For instance, rents in studios fell 1.9% year-over-year in April.
Indeed, it is clear that the tech hubs are lagging the larger apartment market, which is well on its way to recovery.
In a recent commentary for GlobeSt.com, Greg Willett, the Chief Economist at RealPage, wrote that effective asking rents for US apartments climbed 1.3% in April, rising at the fastest pace seen during a single month for the past decade or so and likely at the fastest pace ever.
Class A communities registered 2% rent growth for the month, compared to increases of 1.3% for the middle-market Class B projects and 0.3% in the Class C inventory.
“This upturn in rent growth arrives right at the beginning of prime leasing season,” Willett wrote. “The vast majority of household moves tend to occur in the time frame from April through September.”
Source: globest.com
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