As we enter into a new year with many of the same financial challenges, it’s important to look into the rental market trends we can expect in 2021.
According to Apartment Guide, here are the 6 Rental Market Trends to Expect in 2021:
- Demand for affordable housing will rise as evictions increase
- Home prices will increase in certain markets
- New construction faces headwinds as lumber prices are high
So what does the 2020 shake-up in the housing and rental markets mean for the average consumer? We took a dive into the events leading up to the current shift in housing trends and how this affects local renters & landlords.
Looking Back at 2020
As 2020 came to a close, we saw a reduction in lease pricing for studios, one-bedroom apartments, and two-bedroom apartments in many major metropolitan areas across the US. In Pennsylvania in particular, these homes continue to sit below the national average, as has been the case for several years. With homes on the market seeing higher prices and bidding wars, it may come as a surprise that most rents have gone down. However, due to the pandemic, more younger people have given up their housing in cities and moved home with their families.
Take a look at the numbers in Pittsburgh: Studio prices have been falling, reflecting a 4% drop since August 2020 and a 10% drop since December 2019. One-bedroom prices are down 2% year-over-year and three-bedroom prices are down 17% year-over-year. Two-bedrooms are the only unit type to experience an increase in Pittsburgh, up 13% year-over-year.
These numbers reflect an emphasis on either studio or two-bedroom units in bigger cities and potentially more interest in smaller cities overall. We believe it’s possible that single renters in big cities may be looking to downsize or take on roommates, and that more people may be considering life outside of big cities.
Peeking Ahead at 2021
The housing market will continue to see gains as more consumers become homebuyers, a new report from Apartment Guide said. Historically low mortgage rates are partially to thank, as well as the large increase of people working from home. NAR (The National Association of Realtors) predicts home sales will reach 5.5 million this year, the highest in 15 years.
Rental prices are expected to remain the same through June, as urban areas adjust to an influx of renters moving to the suburbs. However, apartments will most likely continue their trend of virtual events to attract would-be renters, as well as entice current renters to stay. Virtual tours for apartments will continue to be a popular mainstay and Zoom will not just be for work and game night with the family. Some apartment buildings are hosting virtual fitness classes, as well as other activities, like wine tastings, as part of their amenity services.
Not surprisingly, affordable housing will continue to be in demand throughout 2021. With low mortgage rates expected to continue, would-be homebuyers will seek out affordable housing and settle for renting if necessary. It remains to be seen if would-be city dwellers will remain in exodus or return to their city apartments, boosting demand for many vacant units in metropolitan areas.