The national average multifamily rent rose by $1 in September, up to $1,463 overall, according to the latest Multifamily National Report by Yardi Matrix. Despite initial fears, rents have only risen or fallen by a few dollars each month since the beginning of the COVID-19 pandemic, amounting to an $8 rent decline overall since February.
Despite difficult conditions, the multifamily industry is holding up better than expected, with 92.2% of apartment households making full or partial rent payments over the course of September. Rent growth fell by 0.3% YOY in September, a 10 basis point decline from a revised -0.2% rent growth in August. At the metro level, metros with the highest pre-pandemic rents have suffered the greatest losses, with San Jose (-6.6%) and San Francisco (-5.8%) leading the charge with the sharpest year-over-year rent decreases by far. According to Yardi, rents in these two metros have declined by $205 and $136, respectively, since February.
The two best-performing markets are the Inland Empire at 3.4% and Sacramento at 3.1%. Rents in these markets have risen by $35 and $37, respectively, over the same time frame. Markets with positive rent growth also include Phoenix (3.1%), Indianapolis (2.8%), and Charlotte, North Carolina (1.7%). All five markets were also top rent growth performers before the pandemic, with low costs of living as a common market feature. At the same time, San Francisco was among the lowest rent growth markets in February, with 1.8% rent growth YOY. According to Yardi, the pandemic has accelerated declines in markets that were already not performing well.
Rents fell by 10 basis points on a month-over-month basis in September, down 30 basis points from a revised 0.2% increase in August. Overall month-over-month rent growth is negative in 17 out of the top 30 metros, with San Jose as the worst-performing metro at -1.4%.
As the election looms and the pandemic continues into the fall and winter, market conditions remain uncertain and volatile. Consumer confidence has fallen to its lowest level than more than six years in August, and while the unemployment rate has fallen to 7.9% as of September, 12 million people remain unemployed, temporary layoffs have risen by 1.5 million in the last month, and the number of permanent job losses has risen by 345,000 to a total of 3.8 million.
The labor force participation rate is down 0.3 percentage points to 61.4%, down a total of 2 percentage points since February. As many schools remain online, some parents have had to sacrifice their jobs in order to care for children or other family members.
A number of large corporate layoffs are also looming on the horizon. Disney recently announced 28,000 layoffs, many of them part-time workers in Orlando and Orange County, Florida, and United Airlines and American Airlines have furloughed a total of 21,000 employees based around the country. Yardi notes that this is an announcement to watch moving forward, to see if the furloughs become permanent layoffs.
