Major urban centers such as San Francisco and Manhattan are continuing to experience rental price declines in the double digits YoY, according to a realtor.com®‘s December Rental Report.
At the top of the list for rental declines is San Francisco, where rent prices took a dive across all three apartments types: studio (-33.8 percent), one-bedroom (-25.5 percent) and two-bedroom (-22.8 percent) units. The following urban centers also saw rent declines for studios and one-bedrooms: Santa Clara, Calif., and San Mateo, Calif. Among the cities seeing the largest YoY declines outside the Bay area are Manhattan, Boston, Seattle and Washington, D.C.
Median rent for a studio apartment in Manhattan, for example, declined 21.0 percent YoY, coming in at $2,288 in December. For a one-bedroom unit, the decline was 18.4 percent and for a two-bedroom, the decline was 16.1 percent.
“Right now is a great time for renters in major cities to lock in a low price for 2021,” said realtor.com® Chief Economist Danielle Hale. “But renters in some other areas are seeing a very different trend. With more flexibility and more time at home, renters have sought out extra space, driving up rents in the suburbs and less dense markets. As vaccines are being rolled out nationwide, the question is, how much longer will these trends continue? What’s clear, is that the mantra of real estate being local very much applies to rents, not just home prices.”
On a national basis, median rent for studio apartments dipped 0.7 percent YoY in December, while one-bedroom rent increased 0.8 percent and the two-bedroom median rent increased 2.6 percent YoY. In terms of rent increases, Sacramento, Calif., takes the lead with the average monthly rent increasing 20.3 percent, 12.4 percent and 9.1 percent, respectively, for studio, one-bedroom and two-bedroom apartments.
On the purchase/sale side, the divide between buyers and sellers is widening, according to realtor.com®’s Housing Market Recovery Index. The index tracks movement in new listings, buyer demand, time on market and prices—reaching 103.4 nationwide last week, which is above the pre-COVID baseline but below the December reading.
Here’s a breakdown of the markets for the week ending Jan. 16:
– Median Listing Prices: +15 percent YoY
– Newly Listed Homes: – 22 percent YoY
– Total Inventory: -43 percent YoY
– Days on Market: 9 days faster YoY, 1 day faster WoW
“The housing market has lost some momentum in early 2021,” said Hale. “We continue to see strong demand from home shoppers, but with a shrinking number of homes, rising prices and homes selling quickly, the market continues to favor sellers. So far, lower mortgage rates have blunted the otherwise dampening effect that higher prices could have on buyers. However, that may change in 2021. We saw mortgage rates tick up last week, and if they continue this new course as we expect, affordability is likely to become a bigger challenge for buyers this year.”