New data from property management software company RealPage shows apartment occupancy in the US surged to a record high in December. High occupancy rates come as renters were lured in with pandemic discounts in late 2020 and 2021 as others fled metro areas for a new life in the suburbs.
RealPage said 97.5% of the professionally managed apartments in the US last month were occupied, the highest on record. The figure is two percentage points higher than the occupancy rate in December 2020. Just a few percentage points equate to hundreds of thousands of households.
"I don't think most people realize just how crazy that is," Jay Parsons, deputy chief economist for RealPage, told Bloomberg.
"Not only is that a record, typically we consider 95 to 96% to be essentially full," Parsons said.
In the first year of the virus pandemic, apartment rents plunged as residents fled metro areas, such as ones in New York, Los Angeles, and San Francisco. Operators of apartment buildings panicked during the pandemic when tenants broke their leases and escaped cities due to lockdowns and soaring violent crime. As rents fell, operators began to offer substantial discounts to new tenants. The deals lured in new renters in 2021, resulting in soaring rent prices throughout the year.
Most new tenants are locked into a multi-year lease and have no intention of moving. Another issue for renters is the low housing supply, and surging prices have kept them on the sidelines. Prices are expected to continue rising in 2022.
In a separate report, Pew Research Center found rental homes and apartments across the country are experiencing the lowest vacancy rates in four decades. Despite the Covid-fueled migration patterns, a record low number of households moved between March 2020 and March 2021 because of low housing inventory.
"Rents are rising, and the discounts and concessions of 2020 are likely a thing of the past. Moreover, demand for housing continues to outpace the supply," Bloomberg said.