By Zillow | PR Newsire
- U.S. rent growth has slowed this spring as heavy unemployment hit renters harder than homeowners.
- Rent price growth in urban ZIP codes has slowed more than those in suburban areas since February, one outcome of unemployment affecting urban renters particularly hard and a possible signal that preferences are shifting in favor of the suburbs.
- The split between urban areas and the suburbs is largest in Dallas-Fort Worth, Sacramento, San Francisco and the greater New York metro.
- Conversely, urban rent growth has been stronger than the suburbs in several metros, led by Kansas City, Detroit, Baltimore and Riverside.
While the for-sale market has shaken off the early impact of the coronavirus pandemic and resumed its torrid pre-pandemic pace, rent growth hit the brakes this spring. Rent prices in urban areas have slowed more than those in suburban areas, a possible signal that renters’ preferred location is tilting toward the suburbs.
Rents were chugging along at a stable pace into the early part of this year, but the spike in unemployment has hit renters more severely than homeowners, and millions have moved back in with parents or grandparents, impacting demand for rentals. That’s caused the rate of rent growth to slow from February to June.
During that period, rent price growth has slowed more in urban ZIP codes than in the suburbs — annual rent growth has slowed two percentage points in urban areas, compared to 1.4 percentage points in suburban areas. That is a subtle split, but it goes against the trend seen just before COVID-19 hit the U.S., indicating the shift was influenced by the pandemic. Contributing to this are urban renters who have lost their jobs, are missing rent payments or are moving home in greater numbers than their suburban counterparts, and suburban rentals may now be more appealing for renters who no longer need to commute or are temporarily unable to enjoy some of the amenities of urban living.