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For the most part, it’s been about one year now that the pandemic shell shocked the majority of US lives. March 2020 is likely a time carved deep into our memories where we collectively watched political, economic, and social trends unfold we’d never expected to encounter in our lifetimes. Thankfully, there are optimistic indicators we’re nearing a return to “normal” soon.
While this is encouraging, it’s not the only good news to hold to. Another factor is that multifamily investing performed throughout the pandemic as it is historically known to do: steadily. In fact, according to Globe St., as of March 2021 the Apartment Rent Index posted the “Largest Monthly Increase Since 2017”.
It’s no secret this asset is highly favored by many investors for the very fact that it has held to a precedence of being one of the most resilient investments available, and why in turn it is considered to be recession resistant. Throughout many turbulent cycles in time, it is multifamily assets that ultimately continue to cash flow, remain highly valued, and in demand.
However, the key to successful investing is not just selecting the right asset. The market and location will always remain a critical factor for how profitable an investment will be.
A recent report by ApartmentList.Com noted that there was, indeed, a direct correlation between the pandemic and how it impacted some of the most expensive cities in the US. Rent rates were forced down considerably as the pandemic acted as a catalyst for significant net migration trends, increased unemployment rates, and factors like which cities remained in shelter longer than others. Given this, yes, some markets were indeed impacted more than others.
One year later, how has it all played out? In comparing asking rent rates in various markets, from March of 2020 to March of 2021, we can see where the least and most impacted markets now stand.
The 5 Least Impacted Markets by Rent Rates Since COVID
5. Santa Ana, CA
Y/Y Change in 2 BR Rent Rates: 8.70%
M/M Change in 2 BR Rent Rates: 0.40%
Current Average Rent Rate: $2,380
Cumulative City-Wide COVID Cases (per state total): 7.24%
4. Newark, NJ
Y/Y Change in 2 BR Rent Rates: 11.60%
M/M Change in 2 BR Rent Rates: -4.90%
Current Average Rent Rate: $1,730
Cumulative City-Wide COVID Cases (per state total): 9.41%
3. St Petersburg, FL
Y/Y Change in 2 BR Rent Rates: 13.20%
M/M Change in 2 BR Rent Rates: 3.20%
Current Average Rent Rate: $1,630
Cumulative City-Wide COVID Cases (per state total): 3.53%
2. Sacramento, CA
Y/Y Change in 2 BR Rent Rates: 14.90%
M/M Change in 2 BR Rent Rates: -2.70%
Current Average Rent Rate: $1,770
Cumulative City-Wide COVID Cases (per state total): 2.70%
1. Durham, NC
Y/Y Change in 2 BR Rent Rates: 20.70%
M/M Change in 2 BR Rent Rates: 9.40%
Current Average Rent Rate: $1,400
Cumulative City-Wide COVID Cases (per state total): 2.58%
The 5 Most Impacted Markets by Rent Rates Since COVID
5. Los Angeles, CA
Y/Y Change in 2 BR Rent Rates: -12.80%
M/M Change in 2 BR Rent Rates: -0.40%
Current Average Rent Rate: $2,650
Cumulative City-Wide COVID Cases (per state total): 33.17%
4. Seattle, WA
Y/Y Change in 2 BR Rent Rates: -13.00%
M/M Change in 2 BR Rent Rates: 0.50%
Current Average Rent Rate: $2,000
Cumulative City-Wide COVID Cases (per state total): 24.88%
3. New York, NY
Y/Y Change in 2 BR Rent Rates: -16.30%
M/M Change in 2 BR Rent Rates: 5.10%
Current Average Rent Rate: $2,680
Cumulative City-Wide COVID Cases (per state total): 45.28%
2. Oakland, CA
Y/Y Change in 2 BR Rent Rates: -17.10%
M/M Change in 2 BR Rent Rates: -0.80%
Current Average Rent Rate: $2,480
Cumulative City-Wide COVID Cases (per state total): 2.28%
1. San Francisco, CA
Y/Y Change in 2 BR Rent Rates: -22.90%
M/M Change in 2 BR Rent Rates: 0.00%
Current Average Rent Rate: $3,500
Cumulative City-Wide COVID Cases (per state total): 0.97%
Taking it all into account, there’s no question that the pandemic has impacted the multifamily market, with some of the most expensive primary markets not surprisingly taking the hardest hits. This is one of many reasons why investors realize new opportunities must be evaluated in a far more careful manner now.
In summary, there are several indicators that investing remains a consistent and worthwhile approach to financial growth and management. As we continue to make progress in returning to the “norm”, take the best of these lessons along with you and be bold, keep moving forward, and let nothing detour you from building your best life! COVID was hard, but we are stronger.
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About the Author
Ellie is the founder of Blue Lake Capital, a commercial real estate investment firm specialized in multifamily investing throughout the United States. At Blue Lake Capital, Ellie partners with both institutional and individual investors to grow their wealth by achieving double-digit returns by investing alongside her in exclusive multifamily deals they usually don't have access to.
A defining factor of Blue Lake Capital’s strategy is founded in utilizing machine learning/artificial intelligence throughout the course of all acquisitions and asset management. This advanced technology enables the company to produce accurate and data-driven forecasting for all assets on a market, property, and even tenant basis. In doing so, Blue Lake is able to lead commercial investments with the full capabilities of today’s technology.
Ellie is the host of REady2Scale , a podcast that highlights honest, insightful, and thought-provoking discussions on the multiple approaches for successful real estate investing.
She started her career as a commercial real estate lawyer, leading real estate transactions for one of Israel’s leading development companies. Later, as a property manager for Israel’s largest energy company, she oversaw properties worth over $100MM. Additionally, Ellie is an experienced entrepreneur who helped build and scale companies by improving their business operations.
Ellie holds a Masters in Law from Bar-Ilan University in Israel and an MBA from MIT Sloan School of Management.
You can read more about Blue Lake Capital at www.bluelake-capital.com and learn more about Ellie at www.ellieperlman.com.
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