2020 has been an unprecedented year in many respects. The US rental market, similar to many facets of American life, has fundamentally changed from where it was a year ago. The outbreak of the coronavirus in the United States led to a mass migration of renters out of high-cost-of-living areas into cheaper, often neighboring markets. The result of this demand shift has been historic price decreases in expensive areas and historic price increases in more moderately priced markets, which has made the cost of living somewhat more equitable across the country.
In light of these historic shifts in the US rental market, we’ve compiled some of the most interesting price and migration trends this year by state into the interactive dashboard below. This serves as a more user-friendly view into US rental market trends than the in-depth market analysis we released last month. Overall, the map shows that COVID’s impact on rent at the state level presents a more stable picture but on a city level, there is still widespread price volatility.
Price Shifts
Despite unprecedented pricing shifts in many cities, prices did grow at the state level throughout most of the country with a few key exceptions. Several northeastern states- notably New York (-20.2%), Massachusetts (-12.4%), Connecticut (-1.9%), Maryland (-8.2%), Maine (-17.0%), and Virginia (-4.8%) all decreased in 1-bedroom median price from last year. Decreases in these states are being driven by declines in their major cities. In New York for instance, New York City, Buffalo, and Syracuse have all declined significantly in price from last year, while only Rochester has increased.
Dramatic price shifts in other cities in the country aren’t necessarily felt at the state level. In California, for instance, major cities in the Bay Area and Los Angeles have decreased significantly in price throughout 2020. But other Californian cities, such as Sacramento and Fresno, have grown significantly over the same time to offset decreases in other places. The result is a very slight increase in 1-bedroom median price of 1.7% in California state-wide.
The regions of the country that are increasing in price state-wide are essentially everywhere but the Northeast, West coast, and Upper Midwest. Notable growers include Montana (36.7%), Alabama (16.4%), Idaho (13.8%), New Mexico (13.3%), Louisiana (11.8%), and Pennsylvania (10.7%).
In terms of rankings in 1-bedroom median price from our National Rent Reports, the cities that moved up the most nationally were: St. Petersburg, FL (+22); St. Louis, MO (+17); Cleveland, OH (+17); Indianapolis, IN (+15); Fresno, CA (+15); and Newark, NJ (+13). The cities that decreased the most nationally were: Buffalo, NY (-22); Irving, TX (-17); Milwaukee, WI (-16); Madison, WI (-14); Salt Lake City, UT (-13).
Migration
Domestic migration-which we measure as the percentage of users interested in moving to a new city- has increased dramatically in 2020. We estimate domestic migration to have increased 7 percentage points from a year ago. It is important to understand that renter migration brought on by the pandemic is the underlying phenomenon affecting prices in most places. Looking at the chart in the dashboard, an upward trend indicates renters are moving cities while a downward trend indicates they are staying put.
In general, there is an inverse relationship between domestic migration and price, which can be seen by clicking through the states in the dashboard, but it’s interesting to note where this is not the case. To be clear, the migration chart in the dashboard measures interest in moving to a new city- inside or outside of the same state- not interest in moving out of a state entirely. In California, for instance, both migration and price are up, which likely reflects renter migrations out of expensive California cities into cheaper ones. In New York, the increased migration rate likely reflects moving out of the state entirely, such as the renter migration from New York City to Newark, which we have documented before.
Looking Ahead
While this year concludes on an optimistic note with an end to the COVID-19 pandemic in sight, the US rental market will likely feel the ramifications of COVID’s effects in the mid, and perhaps long, term. Prices will most likely continue to drop in expensive markets like the San Francisco Bay Area and New York City, but probably at a slower rate consistent with what we’ve observed in recent months. Expensive markets are still experiencing a net outflow of renters, which has a downward effect on prices, and there’s no reason to believe that will come to a halt in the near future. There has been a significant upward trend of new renters interested in moving to expensive markets due to discounted prices, but there are likely far less coming compared to those who are going out. Prices in expensive markets will continue to decrease as long as inflows and outflows are out of equilibrium.
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