The reason the apartment hit the market about two months ago is that the rent had become prohibitive for the previous tenants, who had lost their jobs because of the covid-19 outbreak.
“The unfortunate thing is that the unit is available because the two people who lived there couldn’t afford it,” said Dickey, who works for a marketing firm in the financial services industry.
In a way, Dickey’s new home, which she planned to settle into this month, exemplifies the nation’s rental market during the ongoing health crisis. Renters still move because their leases are up, because they want to, because they can. But many more than usual are looking for cheaper places to live because of what the pandemic has done to their incomes.
“If people need to move, they need to move,” said Ben Snow, a Boston-based real estate agent with Coldwell Banker who helped Dickey.
Across the country, agents say the rental market has remained relatively active amid the pandemic, an assertion that apartment-search website RentCafé backs up with its rental surveys. According to a report based on responses from 9,000 renters, the percentage willing to move as soon as they found a new apartment leaped to 62 percent in mid-April, a 10 percent increase from the end of March. The share of renters willing to stay put plunged to 11 percent from 17 percent.
Other rental market indicators show that inventory has decreased in some cities, while rent prices have held up across the country. In the Washington area, Coldwell Banker agent Hugo Romero said rental listings for March through May declined nearly 14 percent, compared with a year ago. And he said the “monthly supply” — an estimate of how long it would take to lease all the units on the market — dropped to less than two months, a contraction of nearly 50 percent.
“The reduction in the inventory, I believe, is also directly related to the pandemic, as people put their plans on hold whether voluntarily or involuntary,” Romero said. “Tenants did not move out as expected, and also homeowners that were going to move away for jobs, especially with the military and federal government, and would have rented their properties, ended up not moving.”
Pushed by the reduction in supply, rent prices rose about 4 percent, on average, from March through May, compared with the same period in 2019, Romero said.
At the same time, the coronavirus pandemic has changed how renters look for, commit to and move to new homes.
The rise of virtual tours
For Barri Dean, a lawyer who was quarantined with three sons in an apartment in Northern Virginia, the pandemic reinforced the need for a larger home. Dean had begun looking for a more spacious residence before the outbreak. But once the pandemic arose, the way she conducted her search changed, reflecting the effects of covid-19 on the real estate industry.
“A lot of the places I looked at had walk-through videos,” she said.
Video tours have become a necessity for rental agents unable to do in-person showings, for whatever reason. Video presentations could morph into the new normal, a useful tool for renters to quickly vet units, after covid-19 restrictions let up, Romero said.
Today, if a unit is vacant, most local authorities allow in-person tours under social-distancing rules. In the D.C. area, Dean was able to visit several vacant rental properties. But she walked into them alone, wearing gloves and a mask, while the real estate agents waited outside.
“I was, of course, nervous about being around other people,” Dean said. “I wasn’t comfortable to look at a property if the Realtor wanted to walk around with me or be in the space with me.”
Another way to see a home — especially if someone is living there — is a video call. Dean did that too, deeming a live tour by mobile phone better than a recorded video.
“In a [recorded] video, sometimes a person may not open a particular door, and you’re like, ‘Oh, I really wish I could see what was behind there,’ ” Dean said. On a video call, you can just ask.
Regardless of the showing method, Janna Raskopf, real estate agent with Douglas Elliman in New York City, advises apartment seekers to request visuals of the common areas.
“Those are so important,” Raskopf said. “If there isn’t a video of the laundry room ask if there are any photos. Ask how much the laundry costs per load.”
Signing a lease online
Dickey watched videos and browsed through photos of her new apartment — a rented condo unit — before she signed the online lease agreement, which she later described as the “epitome of a standard lease.” But she also signed an appendage that underlined the gravity of leasing a home sight unseen.
That addendum was a hold-harmless accord, which generally states that the new tenant cannot hold the brokerage liable if the unit does not live up to expectations, especially when the tenant hadn’t set foot in the place.
“When I got that form, [it felt] a little bit like reality crashing down on me,” Dickey said. “I really, actually have not physically been in this unit. What if this is all too good to be true? What if I kind of got blinded by the fact that I finally found something that had everything I wanted and in my neighborhood.”
Coldwell Banker’s Snow, who brokered the lease, said those forms have become more popular amid the coronavirus pandemic as a means to safeguard real estate professionals operating in unprecedented conditions.
“Any of us who have taken real estate education classes before we’ve even got a license have learned about [hold-harmless agreements],” he said. “But it’s not really a document that we have seen as much until now. It is especially being leveraged now.”
That Snow knew the owner of the condo, which he had visited before, reassured Dickey. Yet she advises fellow renters to exercise extreme caution and work with trustworthy real estate practitioners.
Another matter that has become more important since the covid-19 outbreak is the vetting of tenants, especially their employment status and their ability to pay monthly rent.
“It is now more important than ever [for landlords] to make sure that [renters] are actually employed when they are applying,” said Romero, who is based in Northern Virginia. “An employment notification has become more important than ever before.”
In some locales, the coronavirus pandemic has also encouraged concessions and incentives for new tenants. For example, in New York City, Raskopf said, landlords have been more willing to shoulder a broker’s fee, which typically ranges from a month’s rent (about 8 percent of annual rent) to about 15 percent of annual rent. Renters usually paid the fee in the past.
In general, large multifamily operations are more likely than mom-and-pop landlords to have the financial bandwidth needed to offer incoming tenants incentives such as rent-free months, fee waivers, and short-term lodgings while waiting for an apartment to become available. (Think of a situation in which a tenant has to remain in quarantine after being exposed to covid-19 and cannot leave in time.)
“If you only have this one property, it’s a condo that you bought three or four years ago and you decide to rent it out, you don’t really have the ability to provide comparable accommodations,” said Steven Krieger, a lawyer in Arlington, Va. That is why Krieger suggests that prospective renters always inquire whether the unit is empty before committing to it.
New wrinkles in the market
In most states, moving companies have been designated “essential businesses” and have been allowed to operate during the pandemic. But a change of residence has become complicated in ways that can’t be solved by a moving crew.
In New York City, for instance, some apartment buildings, early in the pandemic, adopted policies intended to curb the spread of covid-19 by encouraging renters, not always in a friendly way, to stay in place — not moving in or out. Move-ins were canceled or rescheduled. Tenants were allowed to extend their leases month to month to reduce the pressure to move out.
In some cases, owners resorted to disincentives such as imposing steep cleaning fees on people moving in or out.
“They’re calling them sanitizing fees,” Raskopf said. “I have heard of one building that’s charging a one-time $3,500 fee to move out of the building. That could be cost-prohibitive to many, and those are things you need to just factor in.”
While no-move policies remain in force on rented units in many condo and co-op buildings, Raskopf said, they have been lifted for the most part in rental apartment complexes in New York. But she advises renters still affected by such a restriction to seek legal aid on what fees they might be obliged to pay and how their security deposits might be affected if they move.
Schlepping belongings to a new address, of course, may also increase the threat of a coronavirus infection, especially if renters interact with movers (or anyone else outside the immediate family, for that matter).
In May, Dean and her sons settled into a four-bedroom single-family house in Northern Virginia. She enlisted relatives to help move her family’s belongings. “We are not going to have movers, so no one outside of the [family] will be helping us,” she said.
Dean also planned to deep clean the house, even if the landlord did so before her family’s arrival.
Some city dwellers, eager to escape crowded urban neighborhoods, are flocking to the suburbs or even moving to other parts of the country, real estate agents say.
In Los Angeles, Sally Forster Jones, a Compass broker and founder of the Sally Forster Jones Group, said she has seen a recent uptick in people from New York seeking short-term rentals in sunny Southern California.
“They’re particularly coming here [to rent] homes for a short period of one to two months, through the summer, and looking at it as a sanctuary almost from the East Coast,” Jones said.
Another rental option — a lease with an option to buy — could become more popular as pandemic-induced uncertainty in the market makes some home shoppers want to rent a residence for a few months before buying it.
“You might consider trying to build a lease option if you think it’s something that you might want to buy, but you’re kind of test-driving it first,” said Billy Rose, co-founder and president of The Agency, a brokerage headquartered in Los Angeles.
After being trapped for weeks inside their homes, some of America’s 44 million renter households may begin to reevaluate the types of properties they live in. Eddie Edwards, an agent with Century 21 New Millennium in Northern Virginia, said large multifamily complexes, which can house hundreds of residents, might see a pullback from prospective tenants.
“You’ve got a lot of people that are in under one roof” in high-rise apartment developments, Edwards said. “You’ve got a lot of people sharing the same AC systems. I had a client who was open to apartment living, but now they’re not. They want a house. They want to have their own space.”
Regardless of what kind of housing people gravitate toward, Edwards said, most should engage a real estate agent to help them navigate listings on popular websites, some of which showcase units that are unavailable at the moment to spur interest ahead of the next rental cycle.
Speaking of availability, pandemic-related eviction moratoriums could add to the confusion as they expire and cases pile up in the courts.
“When courts open, there will be backlogs of eviction cases, causing further delays with apartments being available to tenants,” said Pierre Debbas, partner and founding member of the Romer Debbas law firm in New York City.
Nevertheless, agents across the country expect that rental inventories will rebound once the pandemic eases up and that more renters will move after sheltering in place, although some warn that the economic consequences of the pandemic have yet to unfold completely.
In Northern Virginia, Romero said, “it’s going to get stable throughout the summer, provided that nothing worse happens.”