NASHVILLE, Tenn. (WKRN) — It’s a downward trajectory we’re not used to seeing in the metro– demand for Nashville rents is dropping amid the pandemic. Year-over-year rent growth is dropping and according to Zillow, demand for rentals has been waning since February.
Now, landlords are doing what they can to entice renters. According to Zillow, rental concessions are nearly twice as common now as they were at the start of 2020 and it’s all due to COVID-19.
Ashley Smith, broker with RENU Property Management said people are not only struggling financially. Right now, with so much uncertainty amid the coronavirus, they’re scared to commit, adding, many have moved back in with their parents, if able.
“The employment situation is going to hurt demand and also the pandemic and nature of travel is going to stop people who would be moving there in the first place,” said Joshua Clark, Economist, Zillow Group. The lack of demand is forcing landlords to entice renters with concessions.
“One month we did give a 5-percent discount for those who paid by the 10th,” Smith said. “We had to reduce rental rates a bit and be more competitive to secure leases.” According to Clark, in the Nashville metro, around 40-percent of rental listings offered a concession of some type in July 2020, rising 20-percent amid the pandemic.
A survey of renters taken in April as part of Zillow’s 2020 Consumer Housing Trends Report, found that 55-percent reported receiving at least one concession or perk in their rental agreement.
Zillow found free months or weeks of rent are by far the most popular concessions at 90.8%, followed by a waived or reduced deposit (9.1%), gift card (6.6%) and parking. The median amount of free rent offered is six weeks, which equates to an 11.5% annual discount. For the typical U.S. rental, that would mean about $200 dollars in monthly savings.
“When you’re talking about thousands of dollars, 25-percent off a years rent, things like that, ya, I think concessions are going to be effective in getting people to stay or into a vacant unit” Clark said.
Clark says these concessions are most prevalent in urban cores, which is consistent with previous Zillow research showing urban rents have been hit harder than rent in the suburbs during the pandemic.
“I’ve personally felt the East Nashville area and perhaps downtown were effected the most simply in my opinion,” Smith said. “That is service, hospitality industry and music industry oriented then I also had people who didn’t want [to move] because all of the reasons they wanted to live downtown didn’t exist for the time being and they didn’t see light at the end of the tunnel.” Leaving so many to wonder now, when will this end?
“That’s not something that’s going to disappear the second the virus is eradicated or whatever the next step is,” Clark said. “There is some pain that’s going to take years after a cure is found to go back to normal.”
The typical rent price in July was $1,662 dollars, up 2.3% year-over-year. Smith hopes to recapture what was lost with a standard three to five percent increase when everything stabilizes in late Spring and early Summer of next year.
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