Low-Income Renters Left Out of Pandemic Savings

real estateImage by F. Muhammad
Rent price declines have typically been sharpest in the most-expensive areas, meaning less savings for lower-income renters who were hit the hardest by the pandemic

SEATTLE, WA — Home values continued their march upward in February, matching record monthly growth from months prior, according to Zillow’s February Market Report.[i] While home sales and appreciation soared over the course of the pandemic, rent growth slowed, seemingly a boost for rent affordability. However, it was often the more-expensive areas of metros that softened the most, providing little respite for renters in lower-priced areas.

Rents have largely flatlined nationally during the pandemic and fallen significantly in several expensive markets, but the cuts did not reach all renters equally. While dropping rents could have provided relief to lower-income households who have been disproportionately impacted by the pandemic, rent has remained stubbornly high in more-affordable areas, a new Zillow® analysis shows.

“While the pandemic has cut into demand for rental housing, that has only translated into declining rents in expensive markets, and most acutely at the top-end of those markets,” said Zillow senior economist Jeff Tucker. “This past year saw widespread adoption of work-from-home policies, especially for higher-income renters who previously paid top dollar for proximity to their workplace. Demand for these rentals took a hit as many leapt into homeownership, while the flow of new renters entering these sub-markets dried up, at least temporarily.”

In the New York metro area, for example, rents in wealthier neighborhoods are down 11.6% year over year, but they’re up 1.8% in the least-expensive areas. In Atlanta, like many other more-affordable metros where rent has risen since last February, the increases have been biggest in the least-expensive ZIP codes, putting added financial pressures on vulnerable renters.

Rents across the U.S. are showing real signs of recovery. Typical rents grew substantially on a monthly basis for the second month in a row, posting 0.4% gains after a 0.5% rise in January, lending credence to the idea that rents have bottomed out and are on an upward swing. Still, rents are up just 0.5% year over year, well behind the 3.7% annual pace they were growing in February 2020, illustrating the long road ahead to a full pre-pandemic recovery.

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Home values continue record-setting rise
The typical U.S. home value rose 1.1% in February to $272,446, maintaining the lightning-fast speed of month-over-month growth seen in both January and December. This is the fastest monthly appreciation in Zillow records reaching back to 1996, and still above the previous high of 1% set in the summer of 2005.

Annual home value growth across the U.S. jumped from 9.1% in January to 9.9% in February, the highest yearly appreciation since April of 2006 and an increase of $24,473 for the typical U.S. home.

For-sale housing inventory remains lower than a year earlier, as it did throughout 2020 largely due to a fast pace of sales. Inventory fell 8% from January, and is down 30.3% year over year.

“Home price appreciation kept up its breakneck pace in February, as a wave of early-bird shoppers competed furiously over a very limited inventory offering,” said Tucker. “Monthly price growth accelerated further in most large metros in February, suggesting that buyers still have a lot of gas in the tank to keep pushing prices higher.”

Mortgage rates listed by third-party lenders on Zillow rose from a monthly low of 2.58% on February 10 to 2.98% as the month ended. While the streak of record-low rates may be over, rates remain very low by historical standards — mortgage rates ended February 2020 at 3.91%. Zillow’s real-time mortgage rates are based on thousands of custom mortgage quotes submitted daily to anonymous borrowers on the Zillow Group Mortgages site by third-party lenders and reflect recent changes in the market.[ii]

Metropolitan
Area*

Zillow Home
Value Index,
Feb. 2021

ZHVI – YoY
Change,
Feb. 2021
(%)

ZHVI – YoY
Change,
Feb. 2021
($)

Zillow
Observed
Rent Index,
Feb. 2021

ZORI – YoY
Change,
Feb. 2021
(%)

ZORI – YoY
Change,
Feb. 2021
($)

United States

$272,446

9.9%

$24,473

$1,708

0.5%

$9

New York, NY

$520,587

8.3%

$40,102

$2,471

-9.4%

-$257

Los Angeles-Long Beach-Anaheim, CA

$761,635

9.6%

$67,020

$2,472

-0.8%

-$20

Chicago, IL

$263,185

7.6%

$18,544

$1,634

-3.0%

-$50

Dallas-Fort Worth, TX

$278,259

8.9%

$22,774

$1,519

2.2%

$32

Philadelphia, PA

$280,522

11.3%

$28,531

$1,583

2.3%

$36

Houston, TX

$235,792

8.1%

$17,684

$1,391

-0.1%

-$1

Washington, DC

$483,254

9.5%

$41,761

$1,979

-3.8%

-$79

Miami-Fort Lauderdale, FL

$326,457

7.8%

$23,738

$1,937

3.4%

$63

Atlanta, GA

$269,997

10.6%

$25,981

$1,615

6.3%

$96

Boston, MA

$545,895

10.3%

$50,802

$2,326

-5.5%

-$135

San Francisco, CA

$1,192,921

5.4%

$60,861

$2,831

-9.1%

-$285

Detroit, MI

$202,879

11.0%

$20,028

$1,276

7.3%

$87

Riverside, CA

$441,324

13.0%

$50,666

$2,137

9.5%

$186

Phoenix, AZ

$339,878

18.3%

$52,539

$1,547

8.9%

$126

Seattle, WA

$601,735

13.1%

$69,565

$1,854

-5.8%

-$115

Minneapolis-St Paul, MN

$323,661

9.0%

$26,845

$1,549

-0.2%

-$3

San Diego, CA

$702,933

14.2%

$87,664

$2,380

4.2%

$97

St. Louis, MO

$198,709

9.3%

$16,901

$1,110

3.9%

$42

Tampa, FL

$261,314

13.9%

$31,850

$1,593

7.5%

$111

Baltimore, MD

$323,406

9.2%

$27,275

$1,635

2.3%

$37

Denver, CO

$496,944

10.0%

$45,228

$1,697

0.2%

$3

Pittsburgh, PA

$179,774

10.7%

$17,425

$1,205

1.8%

$21

Portland, OR

$464,988

10.6%

$44,563

$1,628

1.4%

$22

Charlotte, NC

$273,202

11.8%

$28,865

$1,514

2.8%

$41

Sacramento, CA

$489,607

12.3%

$53,610

$1,882

7.5%

$131

San Antonio, TX

$225,999

7.9%

$16,588

$1,278

1.6%

$20

Orlando, FL

$276,596

7.7%

$19,712

$1,600

2.4%

$37

Cincinnati, OH

$211,922

13.1%

$24,564

$1,261

5.6%

$67

Cleveland, OH

$177,598

11.6%

$18,446

$1,151

4.1%

$45

Kansas City, MO

$233,102

11.7%

$24,373

$1,188

4.8%

$54

Las Vegas, NV

$320,222

8.6%

$25,339

$1,455

7.6%

$103

Columbus, OH

$237,025

11.1%

$23,593

$1,282

5.8%

$70

Indianapolis, IN

$205,859

12.2%

$22,349

$1,237

6.9%

$80

San Jose, CA

$1,325,899

12.8%

$150,961

$2,840

-8.3%

-$258

Austin, TX

$408,106

14.5%

$51,552

$1,474

-1.0%

-$15

Virginia Beach, VA

$267,161

8.8%

$21,628

$1,380

6.5%

$84

Nashville, TN

$310,812

9.6%

$27,208

$1,600

1.6%

$25

Providence, RI

$363,298

13.1%

$41,968

$1,606

9.8%

$144

Milwaukee, WI

$224,157

12.6%

$25,124

$1,230

2.8%

$33

Jacksonville, FL

$257,266

10.1%

$23,659

$1,375

6.6%

$85

Memphis, TN

$175,627

11.6%

$18,319

$1,381

9.3%

$118

Oklahoma City, OK

$171,597

8.0%

$12,696

$1,113

3.9%

$42

Louisville-Jefferson County, KY

$200,197

9.1%

$16,751

$1,072

4.4%

$45

Hartford, CT

$263,441

11.1%

$26,216

$1,423

5.3%

$71

Richmond, VA

$272,653

8.9%

$22,387

$1,295

4.1%

$51

New Orleans, LA

$226,517

8.4%

$17,476

$1,263

4.6%

$55

Buffalo, NY

$195,939

12.4%

$21,586

$1,157

6.0%

$66

Raleigh, NC

$314,170

10.2%

$29,035

$1,494

3.0%

$44

Birmingham, AL

$192,094

10.4%

$18,172

$1,140

5.0%

$54

Salt Lake City, UT

$440,100

15.1%

$57,690

$1,421

4.3%

$58

*Table ordered by market size

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[i] The Zillow Real Estate Market Reports are a monthly overview of the national and local real estate markets. The reports are compiled by Zillow Real Estate Research. For more information, visit www.zillow.com/research/. The data in Zillow’s Real Estate Market Reports are aggregated from public sources by a number of data providers for 928 metropolitan and micropolitan areas dating back to 1996. Mortgage and home loan data are typically recorded in each county and publicly available through a county recorder’s office. All current monthly data at the national, state, metro, city, ZIP code and neighborhood level can be accessed at www.zillow.com/research/data.

[ii] Zillow Group Marketplace, Inc. is a licensed mortgage broker, NMLS #1303160.

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