Over the past year, while residents of high-rent downtowns reconsidered their housing options and high-income renters saw their rents decline, the opposite proved true for low-income renters, reports Catherine Rampell in the Washington Post.
“For well-off tenants, bargains abound. In most major metro areas, rents for high-end residential housing have plummeted, according to data from CoStar, a real-estate analytics company.” In Dallas-Fort Worth, high-end apartments saw rents decline by one percent. Chicago saw a drop of 7.6%. Yet average rents on lower-end units (“older or lower-quality structures, with fewer amenities”) have increased two percent in DFW and one percent in Chicago in the same time period. In isolated cases, rent went up as much as 40%. Already suffering more from the economic downturn, “low-income households are getting squeezed from both directions — less income and higher prices for what is usually their biggest single monthly expense.”
The choice by many higher-income renters who “were already the marginal home buyer” to make the transition to homeownership during the pandemic, according to Jenny Schuetz of the Brookings Institution, has put downward pressure on high-rent apartments, many of which are being vacated by newly untethered remote workers. Combined with a slowdown in construction, this put pressure on landlords to reduce rents to entice new tenants and keep old ones. At the low end of the rental market, however, demand still far outstrips supply. The pandemic-induced “surge in demand for lower-price-point homes ended up bidding those rents higher.” Some experts also call the rent increases an “unintended consequence of the federal eviction moratorium imposed last year,” which may be incentivizing landlords to make up the lost income with higher rents on the tenants still paying. “Without a greater supply of affordable housing, the two-track pattern is likely to continue,” deepening America’s economic divide.