Apartment Rents are Falling at a Slower Pace in the Suburbs Article originally posted on Globe St. on August 24, 2023 Apartment rents have fallen to minus 0.7%, based on Apartmentlist.com’s most recent estimates for July of this year. This is the first year-over-year price drop the market has experienced since the beginning of COVID-19. But the decline has been uneven ever since the pandemic, when a gap has appeared between core and suburban cities. Rapid rent increases were concentrated in the suburbs, reflecting the surge in new residents as many fled cities. Little inventory could be found at times and rents went up, no surprise. Rents in cities also climbed but later and moved slower. Specifically, the suburban rents climbed 27% between March 2020 and July 2022 while core city rents went up just 20%, still significant but less. Now a year later, rent growth is 25% in the suburbs and 18% in cities, both down but only a small decline. In many markets, this gap is widening. More important perhaps is that an affordability windfall is not coming to those living in the suburbs since the decline is less and slower. The Apartmentlist.com survey covered 33 metropolitan areas—33 core cities and 387 suburbs. The YoY declines have affected 1.7% of the core cities and minus 1.2 % of the suburban ones. All in all, over the course of the pandemic, suburban rent growth outpaced core city rent growth by almost 8 percentage points, the highest it has ever been. Most of the gap occurred within the pandemic’s first 12 months but since then has widened steadily. In some markets, the urban-suburban gap is more than twice the national average. This is happening in mostly dense, coastal metros like Seattle, Los Angeles and Washington, D.C. where the cities saw deep rent cuts early in the pandemic and only now are returning to pre-pandemic prices. Seattle, for example, saw rent growth in the city of 2% and in the suburbs of 19%. Los Angeles had a 6.9% rent growth in the city versus 20.5% in the suburbs. And Washington, D.C., had a rent growth of 3.8% in the city and 16.7% in the suburbs. New York City was an exception, being among five metro areas where the gap was reversed. Pandemic rent growth is higher in the urban core than in these markets’ surrounding suburbs. What’s coming down the pipeline for rents in the suburbs? It’s expected to cool, in part because fewer moves happen in the winter and the strong construction pipeline means more new apartment vacancies. A recent study found that the majority of last year’s new building permits were for suburban buildings. Yet, it’s still unknown if rent drops will remain concentrated in urban centers or in the suburbs. As more companies call staff back to the office, even if on a part-time basis, demand could increase in cities. But another question is whether some companies will build more in the suburbs where there may be more land. Time will tell.