COVID-19 has had a massive impact on home prices this year as inventory runs low and demand runs high. Because of this, home prices have increased at a steady pace in 2020 according to a report from Black Knight, Inc. Rent prices have followed a similar trend this year, but there are some key differences in pricing patterns between homes and rental properties.
Black Knight uses prices from Orange County, California as an example to compare price trends of homes and rentals this year. In Orange County, median home prices steadily increased over the course of 2020, with a small dip in prices in Q2.
The median price for homes in the area is now $880,000, which is a $100,000 year-over-year increase from 2019. Orange County rental prices have experienced a similar increase this year, with a median price of $3,850 per month, up from $3,600 in Q4 of last year.
This increase in home and rental prices has been mostly consistent across the country in 2020. Black Knight reports that among rental properties, there has been a growing demand for single-family rentals and less for condos. This could be due in part to families looking for more space in wake of the COVID-19 pandemic, which may be more easily spread in tight living quarters.
In King County, Washington, home of Seattle, the rental prices for single-family homes compared with condos exemplifies price trends seen across the country. Condo rent prices have declined throughout 2020 in King County. Condos were approximately $2,250 per month at the beginning of the year in this area. Today, condos in King County have a median price of $2,050, a nearly 9% decline since the start of the year.
MReport has previously reported that home prices have soared 17% above condo prices recently. This price gap is an increase from the 15.4% difference in price between single-family homes and condos sold last year.
Data from the Black Knight report indicates that monthly rents in America’s most expensive cities, like New York and San Francisco, are still about two to four times more costly than smaller metro areas. However, even these expensive cities have experienced some drops in rental prices for condos. The median rent for a two-bedroom condo in New York City has decreased by approximately 30% since the beginning of 2020.
Cities like Charlotte, North Carolina, which are smaller and more affordable, have seen less changes in median rental prices this year. The median monthly rent in Charlotte was $1,300 in Q1 and $1,375 in Q4, indicating a very slight increase in price. Houston, Texas has also seen very little change in median monthly rent prices this year, going from $1,395 in Q1 to $1,400 in Q4.
These data points from all over the country provide glimpses into the overall price trends for rental properties and homes, as well as the shifting prices for single-family homes versus condos. The trajectories of COVID-19 and the economy next year are certain to cause new shifts in the housing market for both homes and rentals.