Suburban rents have been more resilient than those in urban areas during the coronavirus pandemic, but San Diego appears to be bucking the trend.
According to a new Zillow analysis in many regions, the change may be a signal that renters’ preferred location is tilting toward the suburbs.
The San Diego metro area, however, isn’t just holding steady. Rents are still on the upswing, though growth has slowed:
- In June, rent in urban areas grew 2.8% year over year, outpacing rent in the suburbs. There, rent rose 1.5%.
- Since February, that pace of rising rents slowed by 1.9% in urban ZIP codes, and 2.2% in the suburbs.
Urban rent growth has been stronger than the suburbs in other metros too, including Riverside, Kansas City, Detroit and Baltimore.
The split between urban areas and the suburbs is largest in Dallas-Fort Worth, Sacramento, San Francisco and the greater New York area.
Overall rent growth has slowed during the pandemic. Rental demand has been impacted by heavy unemployment that has pushed millions to move back home.
The impacts have been felt more in urban areas, analysts suggest, as typically less expensive suburban rentals may now be more appealing and many of the amenities of urban living are closed, making cities less attractive.
Renters usually have more flexibility than homeowners given their relatively short lease terms, and rent prices are often quicker to move as a result.
Zillow search traffic data does not yet show home shoppers are more interested in suburban homes than in past years, and both areas are seeing similar home-value growth, time on market, sales above list price and rate of newly pending sales. Survey results, however, indicate working remotely is causing many to reconsider their options.
The economic impact on renters may be playing a larger role.
“It’s important to separate how much of the trend we are seeing comes from shifting tastes as opposed to the economic reality that renters face,” says Zillow economist Joshua Clark. “It may be tempting to conclude that urban renters who have been cooped up without outdoor space and unable to visit their favorite local bar are ready to commit to suburban life, and that is likely true for many. But that narrative ignores the job loss that has hit renters, who are disproportionately employed in the industries most affected, and has likely played a bigger role in recent moves.”
– Staff reports