When the pandemic hit, the safe bet was to pack up and move out of the dense high-rise luxury apartments in cities, and into more garden-style apartments in the suburbs. The narrative that surfaced as a result mentioned record number vacancies, plummeting rents, and landlords offering ridiculous incentives to entice new tenants. What didn’t make it to the front page cover was the upward trend in prices that made things less affordable in less affluent areas.
Either people couldn’t afford to live in the population center because of a job-loss, fear of COVID, or remote work made it feasible to relocate, the many thousands of tenants that ended up moving into less posh areas drove rents up due to the demand. Meanwhile, back in the affluent areas where people are coming from the prices plunged, but still, at a level that only high-income earners can afford.
To put things into perspective, Wealth Management refers to a survey conducted by Zumper, a leading apartment rental service in the country. The study found that residents in the King County-Seattle region which has a median income of $102,600 left for places such as Tacoma where the median income is $79,200. Seattle, or King County, experienced a 15% slip in average rents for a 1 Bedroom apartment compared to the 21% uptick seen in Tacoma. Similar trends were found in people moving from San Francisco to Sacramento, or in the east, New York to Kingston.
“This is, at its heart, a migration story,” said Neil Gerstein, an analyst at Zumper and the author of the study. “These prices are shifting because the pandemic caused a lot of people to move.”WealthManagement.com
The story of inequality and affordable housing has also been prominent among real estate professionals. Prices have surged in smaller markets due to the ‘migration story,’ and it’s making things more difficult for residents who were already living in those areas.
With vaccines bringing promise experts do believe that many people will opt to move back to the cities and that prices will see stabilization to a certain degree. However, it’s also likely that many will trade the high-rise prices for an old-fashion commute.