In 2020 we saw a steady trend of rental prices dropping in densely populated areas and rising in suburban towns and mid-sized cities. An economist at Zillow, Joshua Clark, puts it simply, “Big cities are losing demand because people are having a hard time finding jobs during the pandemic.”
He predicts that there will be further drops in rental prices in major cities. One data point that supports this prediction is a rise in concessions like waived security deposits, free months of rent, and free parking. Landlords would rather give concessions than reduce rent, and a substantial increase in concessions generally means rent prices will drop in the near future.
Denver is not immune to this trend. We have seen rental prices drop in and near Downtown Denver and we have seen rental prices increase in areas like Castle Rock.
While rental prices in major cities will most likely continue to struggle in the coming months, there is also reason to be optimistic. The good news is that the rental market remains stable and, even in areas hardest hit by the pandemic, these areas will recover.
As many companies move towards long-term plans to have employees working remotely, there is concern that major cities will face long-term effects. However, as rental prices in major cities drop, the benefits of being in the suburbs diminish and tenants will begin moving back into major cities. Further, as COVID restrictions are lifted and the economy recovers, the demand will return.
Landlords in midsize cities and suburbs should expect rental demand and prices to remain strong in 2021. Although major cities will likely see reduced demand and prices in the next few months, that demand will return as the pandemic ends and the economy stabilizes. When this happens, rental prices will go back up.
The moratorium on evictions has been extended through March of 2021. Although property managers can place 10 demands and get in line for evictions the process is now slower and very enigmatic at this point. It is now more important than ever to conduct thorough screening of probably tenants.
In you need a Denver property management company check us out:
Denver Real Estate Moguls
1449 Pennsylvania St,
Denver, CO 80203