Much like we all predicted would happen, the people are coming back to city-life, and despite the recent delta variant surge, landlords in downtowns are being inundated by applications.
The amount of interest that people are showing for rental units in the cities is causing ‘bidding wars,’ an act that is more prevalent in the single-family home market—not so much multifamily prior to the pandemic. As more and more cases of the delta rise, professional jobs are starting to require proof of vaccination, as such so are many services, entertainment venues, restaurants and amenities that cities offer.
This is triggering a sense of ‘urgency’ among the vaccinated community, e.g. working professionals, who want to get back to their pre-pandemic city life. Having said that, the return to office is still uncertain, and will undoubtedly be the dagger needed to end urban flight caused by the pandemic.
“The rental applications that we’re getting right now, you’re seeing higher credit scores, you’re seeing applicants willing to put down more in terms of security deposit, you’re seeing strong rental history as well. That wasn’t necessarily the case pre-Covid,” said Vipin Motwani, managing principal at Iron Gate Development in Maryland.
Rents are going up nationwide due to higher competition for rental units. July recorded a 7% year-over-year increase in rents for one-bedroom apartments, and 8.7% uptick for two-bedroom units, according to Zumper. And this is already improvement on the 5% and 6.5% annual gain we saw in June. As expected, coastal markets are gaining more traction and seeing the highest demands as San Francisco is enjoying a 79% increase in prospective renters, similarly Seattle saw a 55% upward trend, and New York City more than doubled its marks from 2020.
As prices continue to rise due to very little inventory, the type of renter that would qualify becomes narrow since many are simply being priced out.
“The coronavirus pandemic eviction moratorium, recently extended, is also playing into the supply situation. As some landlords are unable to evict tenants who aren’t paying, they have less supply to offer those who can pay. To offset losses, some are raising rents on the properties they can, knowing that demand in the market will support the increases.”