5 Markets Where Rents Are Plummeting Due to COVID-19
With all the craziness surrounding COVID-19 right now, real estate investors are confused about what to do. Which housing markets are getting hit hardest by the virus? Although we’re not all the way through it yet—and we’re not sure how long it’s going to last—we can start to look at some of the recent data to find some answers.
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Today, with the help of our data team over at BPInsights, we want to share with you some data on the five markets where rents are plummeting the most due to COVID-19.
These five cities have been identified as seeing the largest percentage decrease in average monthly rents from the beginning of the year to May 2020.
5. Manhattan, Kansas
Let’s get to the list. At number five, we have a city nicknamed the Little Apple for its resemblance in name to the Big Apple in New York.
The city? Manhattan, Kansas.
In the decade prior to this year, rents in Manhattan were up 50% over the last 10 years. The average monthly rent in the beginning of 2020 for a unit in Manhattan, Kansas, was $1,134. But over the last five months, the monthly rent has gone down 9%, or $102, to $1,032 average monthly rent as of May 2020.
4. Reston, Virginia
This city was pegged as the best place to live in Virginia in 2018 by Money magazine. We see this evidenced by a 37% rent growth over the last 10 years. But Reston is taking a hit to its average monthly rent in 2020. Rents have dropped by 9.5% in the span of just five months.
That means if you were to rent an average home in Reston at the beginning of the year, it would’ve cost you $2,486 per month in rent. Fast forward five months, that same house would cost $2,251 per month in rent. That’s a $235 decrease.
3. North Miami Beach, Florida
Number three on our list as we head to the coast is North Miami Beach, Florida. Prior to this year, North Miami Beach saw a 41% total rent growth over the past decade.
Flip the calendar to 2020, they’re currently experiencing an 11% drop in average monthly rents. Their average monthly rent of $1,933 in January 2020 is now down to $1,720, which is a $213 decrease.
2. Jersey City, New Jersey
At number two on the list, we have the third-largest city in the New York metropolitan area: Jersey City, New Jersey. Despite having 42% total rent growth in the decade prior, Jersey City is the second most affected by declining rents in 2020.
So far rents in Jersey City have declined by 16.1% over these last few months from an average of $2,582 at the beginning of 2020 to $2,166 in May, a $416 decrease.
1. Coral Gables, Florida
And lastly, with the market most affected by coronavirus, we stay on the East Coast. This market was experiencing a 34% decade-long rent growth prior to the year and has seen that growth almost fully slashed in the wake of the virus.
This market dropped by 25% in average monthly rent over the last five months.
Coral Gables’ average monthly rent to start the year was $2,935 and has dropped to just $2,202 in May. That means if Coral Gables were to keep up this trend for the rest of the year, they would be at a 50% annual rent drop. That means landlords hoping to rent out their properties would only get about half of what they could have gotten toward the end of 2019.
Great for tenants, not so good for landlords.
Now, I do want to put out a quick disclaimer. There are certainly many factors that could be affecting rent changes, whether good or bad, in 2020. Not all of it can be attributed to COVID-19. And who knows, maybe at the end of this pandemic, we’ll see these same cities skyrocket back to normal rental rates and get back to their 10-year trends. Who knows?
If you’re looking for more insightful data on historical and future-looking trends in the real estate market, including in your market, be sure to check out the brand-new BPInsights.
Think you know a city that should have made the list?
Let us know in the comments below.