Renters fled from the most expensive cities in droves after the coronavirus pandemic began in the spring of 2020, and that trend is likely to continue in 2021. Especially as remote work continues, those who are able to will continue to leave major cities in search of more square footage, private outdoor spaces, less density and greater affordability.
But that’s not the whole story.
Yes, rents are down in big urban centers, especially the most expensive markets. “The median one-bedroom price in the top seven most expensive cities and Seattle, which was formerly the eighth-most expensive city, has decreased 15.2% since the start of the year,” according to data from Zumper’s November rent report.
These drops were especially dramatic in the most expensive rental market in the country: San Francisco. Median one-bedroom prices in San Francisco were down 20.7% versus one year ago. New York, Oakland, Boston, San Jose, Seattle, Los Angeles, and Washington, D.C. all saw double-digit declines as well.
However, Zumper’s data also shows a few other very interesting trends. First, the median one-bedroom price in the other 92 cities the listing site tracks has actually increased 5.3 percent since the start of the year. So, rather than a mass exodus to the suburbs, clearly many of these city dwellers have simply swapped one urban location for others that offer more space and amenities for less money.
For example, Boston saw a 12.6% year-over-year drop in one-bedroom median rents, while just an hour away in more-affordable Providence rents are up 9.5 percent during the same time period. Other urban markets on the rise include Newark, Baltimore and Sacramento, which all saw double-digit increases, year over year.
Also, those plummeting rental rates in the most expensive cities seem to have slowed considerably, meaning we may soon reach an end to the decline, though obviously that will depend greatly on the overall economy moving forward. San Francisco’s monthly decrease slowed from 6.9% two months ago to 1.1% last month, according to Zumper, and New York was down 1.9 percent last month compared to 3.7 percent the month before.
The fact that these plateaus are occurring during what is normally a pretty sleepy time for the market is an indication that these cities may maintain their current values, or even tick back up, in the months ahead.
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