Rents in Expensive Metros Got Most Relief from COVID

Although dropping rents could have provided relief to lower-income households disproportionately impacted by the pandemic, rent has remained stubbornly high in more-affordable areas, according to Zillow’s February analysis. While home sales and appreciation soared during the pandemic, rent growth slowed, seemingly a boost for rent affordability. However, it was often the more-expensive areas of metros that softened the most, providing little respite for renters in lower-priced areas.

“While the pandemic has cut into demand for rental housing, that has only translated into declining rents in expensive markets, and most acutely at the top-end of those markets,” said Zillow senior economist Jeff Tucker. “Demand for these rentals took a hit as many leapt into homeownership, while the flow of new renters entering these submarkets dried up, at least temporarily.”

However, U.S. rents are showing real signs of recovery. Typical rents grew substantially on a monthly basis for the second month in a row, posting 0.4 percent gains after a 0.5 percent rise in January, lending credence to the idea that rents have bottomed out and are on an upward swing. Still, rents are up just 0.5 percent year-over-year, well behind the 3.7 percent annual pace of February 2020, illustrating the long road ahead to a full pre-pandemic recovery.