Rents are falling in markets across the country. A new national apartment rental report from the apartment list shows that rents in 41 of the country's 100 largest markets have fallen since the pandemic broke out in March. Rental rates fell the most in San Francisco, New York and Seattle, with average rents falling 17.8%, 11.6% and 9.9% respectively. This has offset all of last year's rental growth in these markets.
Last year, rents fell in only four of the top 100 markets, and the rate of decline was 0.8%. This is nominal compared to the significant rate of falling rents in several markets through 2020. The remaining markets had either flat or improved rents. This year, 26 stores saw rental growth compared to 48 stores that saw rental growth last year. Boise, Toledo, Ohio and Greensboro, North Carolina saw rental growth of 9.7%, 8.9% and 7.6%, respectively, for the year. In several markets, the growth rate exceeded rental growth in 2019. However, most of the markets covered by Apartment List saw slower rental growth compared to the previous year.
Nationwide, rents fell by 1.4% in 2020. This is the first time housing rents have seen negative growth in the last cycle, despite rental growth having declined since 2018. The rent decline rate appears to be improving. Looking at the rental trends from August to September, 59 of the 100 largest markets recorded positive rental growth compared to the previous month.
It's worth noting that the cities with the biggest drops in apartment rental prices are also some of the most expensive in the country. San Jose and Boston round out the list of the top five markets with the biggest drop in rent. Not only are these cities some of the most expensive in the country, but they are also cities where technology companies are driving the job market. With long-term office and retail store closures, many employees are planning to move to alternative and more affordable markets. This could catalyze a longer-term trend in housing rents and demand. These factors, together with unemployment, contribute to falling rents. In the last month alone, rents in San Francisco fell 5.2% and in the other five markets only fell 2.7% in the last month.
On the flip side of this trend, more affordable midsize markets have seen a surge in rental growth. Chesapeake, Virginia and North Las Vegas round off the top 5 list with the highest rental growth at 6.6% and 5.9%, respectively. These cities were a direct beneficiary of emigration and reduced demand in more expensive markets. When tenants continue to benefit from remote working environments, tenants can start making rental decisions regardless of where they work.
