At the onset of the pandemic, the government stimulus provided by the CARES Act helped many renter-occupied households and landlords stay solvent. As a result, luxury four- and five-star rated apartments took the initial hit, mostly due to oversupply versus a lack of demand. Now, as provisions from the CARES Act fade, losses in rent growth are beginning to widen—specifically for lower-income households and less expensive rental units, according to an analysis from Joey Biasi, a consultant at CoStar Advisory Services.

Wages and salary disbursements, which are the main source of earnings for low-income households, remain 2.6% below pre-recession levels, and more help is likely needed to bridge the gap in economic activity and keep households and landlords balance sheets strong, he says.

Biasi notes that affordable rental units have underperformed in terms of rent growth, even in suburban areas where demand has been strongest due to layoffs, which have disproportionally impacted low-income households. With renters fleeing urban areas, a weak economy is also expected to dampen demand for high-rent apartments through the first half of 2021.