LEXINGTON, Ky. (WTVQ) – While the numbers may differ slightly, the overall conclusions are the same — the coronavirus outbreak is having a significant impact on the rental property/apartment industry in Lexington.
According to the Zumper National Rent Report, Lexington is the 88th most-expensive rental market in the country. Rental prices have changed little since the pandemic began in March or since last year, according to the company’s nationwide report.
Lexington’s year-to-year prices for one bedroom units are unchanged from this time last year while two-bedroom units are actual down 4.1 percent.
The median rent for a one-bedroom is $750 a month and $940 for a two-bedroom, not including fees and other add-ons.
According to Zumper, overall, the national one-bedroom rent increased 0.3% to a median of $1,233, while two-bedrooms grew 0.6% to $1,493. On a year-to-date basis, one and two-bedroom prices are up 0.7% and 1%, respectively.
Nationwide, the pandemic is causing a “squeezing” of the price distribution as historically expensive cities become cheaper and historically cheaper cities become more expensive. This effect has continued to accelerate this month as COVID-19 persists on and more Americans are opting for cheaper places to live while working from home or away from their offices.
Meanwhile, a similar study by ApartmentList.com found rents in Lexington were up .4 percent from June to July and .7 percent from March through June. Since last year, rents are up .9 percent, according to Apartmentlist.com, with the median one-bedroom rent at $679 and the media two-bedroom at $871.
“While economic weakness continues to be reflected in sluggish rent growth, the national rent index actually inched up slightly by 0.1 percent over the past month, the first monthly increase since the start of the pandemic. That said, year-over-year growth still stands at just 0.2 percent nationally, and many markets are continuing to see notable declines in prices,” Apartmentlist said in its report.
The company’s national index has declined of 0.3 percent since the pandemic began.
“While this dip may seem modest, it is occurring at a time of year when rent growth is normally at its fastest due to seasonality in the market. Rent growth from March to July has ranged from 1.1 percent to 2.1 percent in prior years, going back to 2014, when our rent estimates begin. And over the entirety of the past year, our national index has increased by just 0.2 percent. This is by far is by far the lowest year-over-year growth rate that we’ve observed in July over any of the past five years,” ApartmentList said.
The pandemic has dramatically slowed moving activity due to the public health concern surrounding the virus itself. A recent survey found that 33 percent of Americans are less likely to move during the remainder of 2020 because of the pandemic.
Furthermore, mounting economic fallout is forcing many Americans to seek out more affordable housing options. The same survey found 21 percent of Americans are now more likely to move with finding more affordable housing the primary motivation, ApartmentList said.
Nationwide, the cities experiencing the biggest dropoff in rent prices are markets where the local economy is heavily dependent on the tourism and service sectors and expensive markets that were already struggling with sky-high rents.
“As far as longer-term impacts, the pandemic’s effect on rent prices will depend heavily on how quickly the economy is able to recover. There are indications that the recovery will be more drawn out than many had initially hoped, making it likely that we’ll see a protracted uptick in downgrade moves as many households facing financial hardship begin looking for more affordable housing. We may also see a significant slowdown in new household formation, as more Americans move in with family or friends to save on housing costs,” ApartmentList projected.
“These trends could mean that competition will remain tight for rental units at the middle and lower ends of the market, while luxury vacancies get harder to fill. As long-term remote work gains traction, we may also be seeing the beginning of a shift away from expensive downtown markets and toward more affordable suburbs,” the report concluded.