2020 was a rough year for everyone, with renters and landlords often bearing the brunt of the recession’s impacts.
At the national level, 10% fewer rental applications were submitted in 2020 than in 2019, according to Rent Cafe. Here in California, rental applications in 2020 fluctuated by:
- -7% in San Diego;
- -7% in San Francisco;
- +2% in Los Angeles; and
- +6% in San Jose.
In Los Angeles, 3% of renters left the city in 2020 and 1% fewer renters moved into the city than during the prior year, resulting in a 6% drop in rents. A similar trend took place in San Diego, where 4% of renters left the city and 1% fewer renters moved into the city. Here, rents were a modest 2% lower than a year earlier at the end of 2020.
Meanwhile, San Jose experienced significant turnover in 2020, with 14% of renters leaving the city, but 16% more renters moving into the city. Still, rents are 8% lower than a year earlier.
San Francisco experienced the greatest declines in renters, with 11% of renters leaving the city in 2020. On top of that, a whopping 31% fewer renters moved into the city compared to the prior year. As a result, rents have dropped 17% from a year earlier.
Will the urban exodus continue?
2020’s pandemic-necessitated social distancing measures and business closures have led many industry experts to speculate whether urban living has become less desirable — and, if so, whether the trend will stick.
In California, the data suggests more renters are leaving their urban domains, with the exception of San Jose, which continues to see a growing number of newcomers to the metro area.
However, underlying these numbers is one all-important factor: jobs, and their location.
California has experienced significant job losses and was down 1.35 million jobs from a year earlier as of November 2020. Still, despite losing their streams of income, many of those renters who lost jobs have been able to remain in their residences due to the eviction moratorium. This moratorium is currently scheduled to expire at the end of January 2020, but will likely be extended.
Therefore, while many renters may prefer a suburban or even rural change of pace during this pandemic, only a few have the luxury of a choice. Those with a job are by and large tied to their job’s location, and the largest number of jobs are found amongst California’s major metros. Those who have lost their job during this 2020 recession are forced to either move in with family or friends, or to remain in their unit as long as the landlord (or government) will allow.
Landlords will continue to struggle over the next two years. To attract paying tenants, landlords have already begun cutting rents. Further, as the jobs recovery continues to weaken in 2021, rental vacancies will rise. The timing and extent of the next recovery will depend on future government intervention, including a possible extension of the eviction moratorium and potential landlord assistance.
