"I don't think we've seen a real estate market like this," said Jenny Schuetz, a researcher at the Brookings Institution. "And other recessions looked a little different so it's hard to know what's going on."
In the lead up to the real estate crash, house prices rose much faster than rents, which meant many homes were being sold at prices that owners couldn't support when they needed to rent them out. Then, after the bankruptcy, house prices fell in some markets as rents rose, and newly foreclosed owners poured into the rental market.
Today rents have come down for reasons largely inextricably linked with the pandemic. Fired workers have had to double up with family or friends. College students, who usually rent near campus, stayed at home instead. Some tenants, attracted by low interest rates, have successfully bought a home. And the normal influx of new renters into cities – college graduates, immigrants, workers who just got a new job – has declined during the pandemic.
Current research by Arpit Gupta at the N.Y.U. and colleagues suggest that rents have fallen the most in nearby neighborhoods. These are also the places where during a pandemic it just didn't make sense to pay a rent to be near restaurants, bars, museums, and downtown offices. This has followed another unusual pattern: single-family homes behave much more like condominiums (high demand) while condominiums look more like rental apartments (with weak appeal).
These unusual circumstances in the rental market make it all the more difficult to deal with what is going on on the homeowner's side. The ratio of real estate prices to rents in many metropolitan areas is as high today as it has been since the real estate bubble – but it has increased during the pandemic in part due to falling rents, and not just because prices have risen.
Moody & # 39; s Mr Zandi said he was not yet concerned about an impending disaster like the recent housing bubble. But he says it's already worrying that soaring prices have thrown out many first-time middle-income and low-income buyers who may lose the benefits of a rate fixation below 3 percent in the years to come.
"I don't think they are red torches. I think they are yellow torches," said Mr Zandi. "But if we have another year, as we did last year, we will have a lot of red torches."