Since the first major outbreak in March 2020, the effects of the COVID-19 pandemic have continued to unfold. One emerging trend is a drop in rent prices in select major metropolitan areas, countering the long term trend of sustained price increases in these locations. Explanations for the recent decline include the rise of remote work and the ability of more affluent renters to relocate. This is especially prevalent among workers in America’s most expensive cities.
A recent UBS survey of wealthy investors shows that half of the participants intend to move closer to family, and 46 percent may leave cities in favor of less populated areas. Similarly, a recent Gallup poll found that two-thirds of existing remote workers would prefer to do so permanently. As these trends play out, and more rental properties become vacant in high price markets, landlords will likely continue lowering prices to entice potential tenants.
To profile the cities with the biggest drops in rent prices since the outbreak of COVID-19, researchers at Construction Coverage analyzed rental price data from the Zillow Observed Rent Index to calculate the percentage change in rent prices between March and September 2020. Data from the U.S. Census Bureau were utilized to profile income and employment statistics, with attention paid to employment in finance, information, and technology.
While prices have increased since March in a majority of locations, price drops were observed in areas that tend to have more affluent renters and more workers in finance and technology. For example, median household income for renters at the national level is $42,479 versus an average of $56,510 for renters in metros with declining rent prices. And while 14 percent of the nation’s workforce is employed in finance, information, and technology, an average of 18 percent of renters in metros with falling rent prices work in those sectors.
The analysis found that in the Philadelphia metro area, rent prices dropped 0.1% between March and September. Out of 105 of the largest U.S. metros, Philadelphia has experienced the 17th largest drop in rent prices. Here is a summary of the data for the Philadelphia-Camden-
- Percentage change in rent since March: -0.1%
- Median rent in September 2020: $1,631
- Median rent in March 2020: $1,632
- Median household income for renters: $42,544
- Employment in finance, information, and technology: 17.4%
For reference, here are the statistics for the entire United States:
- Percentage change in rent since March: -0.7%
- Median rent in September 2020: $1,756
- Median rent in March 2020: $1,769
- Median household income for renters: $42,479
- Employment in finance, information, and technology: 14.0%
For more information, a detailed methodology, and complete results, you can find the original report on Construction Coverage’s website: https://constructioncoverage.
