The standard pandemic narrative goes something like this: COVID-19 pushed renters into fleeing their tiny, claustrophobic apartments in the big, expensive cities—in turn causing monthly rents to plummet. However, it turns out that’s only partly true.
Nationally, monthly rents continued to fall for studios, typically the smallest spaces, according to realtor.com®’s October rental report. However, they’re rising again for one-bedroom units and the more desirable two-bedroom abodes. The latter provides extra space, including an extra bedroom, which some folks are turning into makeshift offices.
“We’re seeing the impact of workplace flexibility on rents. Renters are more free to pick up and move,” said realtor.com Chief Economist Danielle Hale. “They’re leaving expensive areas. They’re looking for more space and to cut back on expenses and spend less on rent.”
That makes sense as folks fearing another pandemic-related lockdown are seeking out additional square footage—even if they stay in the big cities.
Nationally, the median rent for a studio fell 0.8% year over year, to $1,316 a month in October, according to the report. But in a twist, rents shot up 1.1% for one-bedroom units, to a median $1,495 a month. For two-bedroom units, rents rose 2.6% annually, to $1,869. While two-bedroom rents are picking up, they’re still below the 3.5% annual growth rate before COVID-19.
Realtor.com looked at rental prices in the 100 largest U.S. counties with at least 20 listings for studios, one-bedrooms, and two-bedroom units on the site. The rentals included apartments, condos, townhomes, and single-family homes.
“Still in a lot of the biggest markets, two-bedroom rents are falling but not by as much. Everywhere people are looking for more space,” says Hale. “If you have the opportunity to trade up, a two-bedroom can make more sense than a smaller [unit].”
Some renters may also be moving in with family and friends to save money—so all of a sudden that extra bedroom becomes a necessity.
Nationally, the largest price cuts were in San Francisco, one of the nation’s priciest housing markets. Many renters who stuck around after some of the largest tech companies announced employees could work remotely until the summer or even indefinitely were able to score steep discounts.
San Francisco studio rents fell 33.5% year over year, to a median $2,180 in October. The tech hub also saw drops of 26.3% for one-bedroom units, to $2,800, and decreases of 23.4% for two-bedroom rentals, to $3,810.
Manhattan’s rental market also took a hit in a boon for renters. The median rent for a studio dropped 20%, to $2,395 a month. One-bedroom rents fell 16.7%, to $3,250, while two-bedroom rentals were 11.1% cheaper, at $5,333 a month.
“These cities are expensive. They have a lot of workers who are working remotely now,” says Hale. “These are [also] cities that tend to attract a lot of students and recent graduates, and they’re probably not setting out for these cities right now.”