Between surging unemployment, migration out of urban areas and a moratorium on evictions, landlords across the country faced a tumultuous journey this year. By June, single-family rent price growth had sunk to its lowest rate in 10 years. While national rent prices picked up pace in late summer, September data points to a recovery, but only for mid- to high-priced rentals.
According to the latest Single-Family Rent Index from global analytics firm CoreLogic, rent prices across the country were up 2.5% from a year ago, the highest annual growth rate since the pandemic took hold.
But broken down, the report shows a divide in rental growth recovery across price tiers, not unlike the K-shaped recovery of the economy itself. Not surprisingly perhaps, lower-priced rentals continued to show declines in September compared to a year ago, while higher-priced rentals began to match last year’s growth rates.
Employment had everything to do with it: Renters in higher-paying positions that were able to transition to remote work were able to continue renting in higher price tiers, or even upgrade to new rentals with more space to accommodate working from home. Meanwhile, renters among the lower-priced tier faced greater job instability, which in turn impacted rent price growth.
“Single-family rent prices regained strength in September and were just half a percentage point shy of their pre-pandemic national growth rate,” said CoreLogic Principal Economist Molly Boesel in the report. “The strength in rent growth was driven primarily by mid-to-high priced rentals, which have regained their lost momentum in late-spring. Lower-priced rentals are still the furthest below their early 2020 growth rates, which is a sign that many lower-income households may be struggling to meet rent payments.”
According to the report, lower-priced rent growth was down 1.3 percentage points from September 2019, lower-middle priced rent growth was down .5 percentage points, higher-middle priced rent growth was unchanged from a year ago and higher-price rent growth was down .4 percentage points.
Phoenix had the highest year-over-year increase in single-family rents in September 2020 at 6.9%, followed by Tucson at 6.2% and Charlotte at 4.3%. COVID-19 migration to these and other warm weather destinations could be attributed to some of the growth.
Boston posted the most significant decline in rent prices (-2.9%), likely due to its shrinking student population, as schools turn to virtual learning during the pandemic.
In Chicago, rents were up only slightly in September, 0.1% compared to a year ago.
According to CoreLogic, until the COVID-19 pandemic is under control, we can expect to see continued fluctuation of rent prices in metros across the country.