It’s been a crazy year both for tenants and landlords here in the Conejo Valley. Although we don’t have as many short-term rentals as our neighbors in Malibu, the Westside or even up north in the Ventura/Oxnard beach communities, we still had a lot of upheaval in the long-term rental markets.
Prices for real estate in all areas have skyrocketed in the last year as the lock-downs forced many to re-think what was really important to them. Larger homes with bigger family spaces and more room in the yard for the kids were the leading priorities as values shifted. Home buyers weren’t the only ones impacted.
Renters struggled as more jobs in the service industries were curtailed or plain eliminated altogether. We saw restaurants, bars, wineries, and coffee shops struggle to manage past the lost customers. The growth of micro breweries and wine pubs in Agoura Hills, Westlake & Thousand Oaks were shuttered with some closing for good. I know that I certainly missed seeing friends at local places such as 14 Cannons or The Stonehaus. Thankfully, many have been migrating back to these familiar places. Not all is lost!
“2020 was a life changing year for people, industries and businesses across the globe”
Many service jobs in other industries were heavily impacted as the move to online commerce was the safer bet for most during COVID. And with those lost jobs our hourly wage earners were the most negatively impacted. If you were lucky enough to keep your job you stayed in place. If not, then you are one of the many that uprooted and moved.
Moving Back Home
As we begin to reopen we are seeing signs that many of those renters that hunkered down will be on the move now as well. In a survey by property management firm Entrata, more than half of all renters (56%) plan on finding a new place to live. And not surprising, they found that a small number of the younger renters are going home again (sorry Moms & Dads – the back door was left wide open) as 14 percent of Gen Z’ers are already back at home in their former teen bedrooms with their poster covered walls and messy closets. Another 22% have moved to larger properties in search of more space, according to the survey.
20% of the Gen Z crowd did the opposite and moved from rural areas to more fast paced cities such as Houston or New York. The reason? As many city dwellers lost their jobs the vacancy rate kept climbing. This necessitated rent decreases of 5% to upwards of 12% in many downtown areas. I have a client in Manhattan, N.Y. that said while many moving vans on the streets in March-June of 2020, they were fortunate to see only a few vacancies in the buildings that they own.
“2020 was a life changing year for people, industries and businesses across the globe,” said Chase Harrington, Entrata’s president and chief operating officer. “Our survey of US renters shows that many moved to larger spaces to accommodate work from home needs, moved back to hometowns and some even moved to the city to take advantage of lower rental rates. We’re seeing a shift in the industry as renters look for more flexible leasing options and think differently about apartment amenities.”
Abatement Program Helped
The rent moratoriums in California left a lot of renters and landlords in a limbo state as the limits on rent payments were lowered and evictions for lack of rent was halted. Those moratoriums are planned for being lifted at the end of June and we expect to see a lot of movement in the market at that point. If you have rental property and didn’t jump on the abatement program offered by the state then you are looking a possibly having a tough time recouping lost rent. One of my landlord/owners felt it was better to take 80% of the rent he didn’t get rather than risk losing in a messy court battle months into the future. What’s the old saying about ‘a bird in the hand’?
The other loss throughout this pandemic has been the growing gap between the cost of renting and the cost of purchasing a home. With home prices climbing higher over the last few years it has become much more difficult to cross that chasm from renter to owner and I feel it will be a long time before we see that change. 39% of renters surveyed said that they cannot afford a down payment in today’s market. They also said that the cost to maintain a home was a reason not to purchase a home. On the positive side the survey found that many have adapted to working from home and appreciate saving money and the time in commuting for work, wear & tear on their cars, eating lunches at work, etc.
Only time will tell how we transition back to a “normal” life.