Rents declined by 0.8% in December on a year-over-year basis, a 30-basis-point decline from November
SANTA BARBARA, Calif., Jan. 14, 2021 – 2020 will go down as the year COVID-19 changed everything. As the pandemic became rampant, many initially feared that rents would rapidly decline. But many metros have emerged from 2020 unscathed, and some have even enjoyed significant rent growth. Others have not been so lucky, especially expensive coastal markets, according to the latest multifamily report from Yardi® Matrix.
The sector ended the year on a low note. Multifamily rents declined by 0.8% in December on a year-over-year basis, a 30-basis-point decline from November. Overall rents declined by $4 to $1,462, the largest one-month decline since the beginning of the pandemic, when overall rents dropped by $5 in April.
The differing impact gap on gateway markets and lower-cost metros continues to widen. California’s Inland Empire (7.3% year-over-year rent growth) and Sacramento (6.1%) top the list, where they have been for the last four months. San Jose (-13.7%) and New York (-11.7%) fall at the bottom of the list. Tech stalwart San Jose, with its remote-friendly job base, has been at the bottom of the list for seven consecutive months. The metro’s overall rents have fallen by 14.1% since March 2020.
Fears about rent collection rates, initially a major concern for the industry when the pandemic began, have not come to pass. According to NMHC’s Rent Payment Tracker, more than 94% of professionally managed apartment rents were fully or partially paid through October. Noticeable declines began to emerge in November and December, although most tenants still seemed to be prioritizing rent payments, with 93.8% of rent payments fully or partially made by the end of December.
As economic uncertainty persists heading into 2021, multifamily professionals will be watching closely to see whether the bifurcation trends between market types continues or if hopes for widespread vaccination draw residents back toward gateway markets once again.
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