Apartment Rents In Coastal Markets Have Officially Hit Bottom

Apartment rents in coastal markets have hit a trough, according to the latest data from Apartment List. Nine of the 10 markets with the most significant rent declines in 2020 had positive rent growth in February. For five of those markets, it was the first instance of rent growth since the beginning of the pandemic.

San Francisco is the primary example. Rents in San Francisco are down a staggering 26% year-over-year, but in February there was some semblance of hope when rents improved 1.2%. This was a welcome reprieve. Rents in San Francisco have fallen an average of 3.4% each month since the start of the pandemic. February was the first time that the market has seen rent growth since March 2020.

San Francisco isn’t alone. Other major metros in coastal markets saw an increase in rents this month. In Boston, rents grew by 3% month-over-month, which Apartment List notes is the largest increase among the nation’s 100 largest cities.

There were caveats. Rents in New York City, for example, continued to fall in February, down .1%. However, this was the only major market from the list with down trending rents for the month, and .1% is a significant improvement from the average monthly decline of 2.4% since April 2020.

Rent decreases in these markets began to slow in December. According to Zumper’s National Rent Report in December rent growth rates in the nation’s seven most expensive markets for one-bedrooms—San Francisco, New York City, Boston; San Jose, Oakland, Los Angeles and Washington DC—remained negative, but not as low as they were throughout the summer months. That trend has now carried into 2021, turning into positive rent growth for some of these cities.

While the rent story changed in coastal markets, affordable cities continued to see rapid rent increases in February—on trend with the performance throughout the pandemic. Apartment List notes that rent growth has slowed in mid-sized cities, there is still runway left for more rent growth. Boise is at the top of that list. The market has had the strongest year-over-year rent growth, and nothing changed in February when rents grew 1.8%, the fourth largest monthly increase in the top 100 markets surveyed. As a result, rents in Boise have grown 13.5% year-over-year.

The top 10 markets for rent growth during 2020 continued to see rent growth in February. Supply has been the biggest driver of rent growth in these markets. New renters have entered, pushing vacancy rates down and triggering competition for relatively few units.