If you’re on the hunt for your next rental property investment, take note: Rent appreciation has slowed down. According to rent reports from both Realtor.com and CoreLogic (NYSE: CLGX), the rate of rent price growth has calmed down considerably amid the pandemic. In some markets, rents have even dropped. Overall, one-bedroom and studio units, as well as rentals in more urban areas, have taken the biggest hit. But there are slowdowns in other areas of the market, too.
Are you currently considering a new rental investment? Can’t decide where to invest next? Here are the markets you may want to avoid.
Realtor.com’s data shows studio rents are down 31% in the city, while two-bedroom apartment rents have dropped 21%. Rents are dropping in areas surrounding the Bay Area, too. Santa Clara and San Mateo counties both saw considerable year-over-year decreases on studio, one-bedroom, and two-bedroom rents.
According to CoreLogic, overall single-family rents have dipped 1.3% over the year in urban Honolulu. Realtor.com says one bedrooms in the area have dipped more than 10%, while studio rents have fallen even more, almost 15%.
Overall, Boston rents have only fallen 0.2% for the year, according to CoreLogic. But when you consider the county and property level, things are a bit more dire. According to Realtor.com, rents in Suffolk and Middlesex counties have slipped anywhere from 7% to 15%, depending on property type.
Seattle’s King County isn’t seeing an overall dip, but if you’re investing in smaller properties -- think studios or one bedrooms -- there’s a problem. Realtor.com says rents on studios are down 12% for the year, while one-bedroom units have dipped nearly 11%.
D.C. still claims some sky-high rents, but they’re not as strong as they once were. Realtor.com reports rents on two-bedroom properties are down 5.8% for the year, and one bedrooms have dipped even more, at 8.1%.
Room for optimism
Looking for markets where rents are moving in the other direction? There are still plenty of those. According to CoreLogic’s data, the top markets for overall, year-over-year rent increases are:
- Phoenix (+4.7%).
- Tucson, Arizona (+4.1%).
- Charlotte-Concord-Gastonia, North Carolina-South Carolina (+3.4%).
- Atlanta (+2.8%).
- Las Vegas (+2.7%).
The Millionacres bottom line
Just remember: The days of ever-climbing rents are gone. Though rents may be climbing in these cities now, that doesn’t mean those trends will continue -- especially amid a pandemic.
Be careful about where you invest in rental properties, and make sure to do your research before buying in. Consider consulting a local real estate agent if you need a better pulse on a new market.