Impacts of the COVID-19 pandemic begin to show not just in missed payments, but also in rental pricing across the U.S.
As unemployment benefits bottom out with 32 million Americans receiving the last of the boosted assistance at the end of June, Zillow found 12.4% of U.S. renters missed payments in the first week of July, which is more than any other time throughout the coronavirus pandemic.
“Those missed rent payments could cause a wave of housing insecurity and have the potential for deep impacts not only for renters, but also for rental owners who owe common costs of property ownership and other workers in the industry,” the Zillow report stated.
During the first week of July, more than 22% of U.S. apartment households did not pay any rent, but by mid-month, the share of renters that hadn't yet paid fell to just 12%. With half of all U.S. households seeing a loss of income due to the pandemic, the report says government assistance has clearly played a crucial role in stopping unpaid rent from ballooning even hire, but as that aid expires, August is expected to be a pivotal month.
"The rental market has been more affected by the coronavirus pandemic than the for-sale side appears to have been. The steady climb of the past few years has come to an end as rent growth has slowed nationally and prices have outright fallen in a few markets," said Zillow economist Joshua Clark. "The saving grace has so far been government aid and eviction freezes, which have provided a lifeline for those who are out of work. But much of that aid has expired, putting many renters and workers who rely on the rental market continuing apace in a vulnerable position."
Changes to rental prices across the U.S.
Rents in the most expensive cities in the United States are seeing an accelerated decline, according to a new report. Zumper found that one-bedroom apartments in seven out of the 10 priciest markets across the country saw an average 5% decrease year-over-year. In five of these cities, there were larger month-over-month decreases compared to the month before. None of these pricy pockets saw an increase in median rent compared to July.
“The two priciest markets continued their downward trajectories with San Francisco and New York City one-bedroom rents down 11% and 7%, respectively, since this time last year,” the report stated.
The exact opposite is happening in less expensive cities, with median rents showing steady increases. Of the top 10 least expensive cities, the report found only one city, Tulsa, had a decrease in median rent for one-bedrooms, and growth averaged more than 5% year over year. The Zumper report says COVID-19 is essentially causing a “squeezing” of the price distribution of rentals across the country.
“Historically expensive cities become cheaper and historically cheaper cities become more expensive. This effect has continued to accelerate this month as COVID-19 persists on and more Americans are opting for cheaper places to live while working from home or away from their offices.”
The report listed the top five rental markets as San Francisco, New York, Boston, San Jose and Oakland.