Desiree Duff lost her bartending job in late March when the New York restaurant where she worked closed along with the rest of the city.

Duff, 29, an aspiring actress, left her apartment in Brooklyn’s Bushwick neighborhood and moved back in with her parents in South Carolina. She’s using unemployment checks to pay her $1,200 monthly share for the now-empty apartment and said she may still return. But the ordeal has left her rethinking the city’s appeal.

“Not knowing what my future there looks like does make me reconsider,” Duff said. “Maybe after my lease is done I should move elsewhere, to a smaller city that was less infected, as much as that breaks my heart.”

As cities from New York to San Francisco have locked down in recent months to prevent the spread of the novel coronavirus, many residents have decided they’d rather wait out the pandemic elsewhere. While the wealthy have settled into their second homes in the Hamptons or Lake Tahoe, many young people are leaving expensive shoe-box apartments to shelter with their parents in the suburbs.

‘Abandon Ship’

“The draw of the city is the social life, the dating scene, bars, restaurants, the ability to do fun things on the weekend,” said Deniz Kahramaner, the founder of data-driven real estate brokerage Atlasa. Without those attractions, “it makes a lot of sense to just abandon ship and go back to your parents.”

The exodus has left apartments empty, remaining roommates scrambling to make rent and landlords wondering whether demand for apartments will return when life gets back to normal.

“It’s a really hard time for the renter, but it’s a really hard time for the housing provider, too,” said Charley Goss, government and community affairs manager at the San Francisco Apartment Association, which works on behalf of property owners.

A survey Goss conducted of 352 San Francisco landlords found that 17% — an unusually large amount — have had tenants break leases or give 30-day notice to vacate over the past month. Of those surveyed, a fifth said they’d received requests for temporary or permanent rent reductions.

Alexa Lewis’s landlord is one of them. Lewis, 24, was living with four roommates in her apartment in the Richmond neighborhood of San Francisco when the city went on lockdown in mid-March. By the end of April, she was all alone.

One roommate took a pay cut and moved home with her family. Another decided to stay with an ex-boyfriend in Oregon, while the master tenant put in her 30-day notice. That left only Lewis and the other remaining roommate, who has been living with family in Sacramento since late March, to renew the lease and come up with $4,900 for May’s rent.

“There were a lot of calls with my family to talk out everything and ask for advice/cry,” Lewis said. Goss helped Lewis work with her landlord to get reduced rent in May and June while she finds other roommates.

Demand for apartments in San Francisco and New York — the country’s two most expensive rental markets — has dropped since the start of the pandemic. Search volumes for San Francisco rental units declined 36% soon after shelter-in-place orders took effect, according to a report by listing site Zumper. In New York, they fell 29%.

Soft Market

Even when the lockdowns lift and the economy begins to recover, Goss said he expects the rental market in San Francisco to stay slow — possibly permanently so — as more people embrace working from home.

“People won’t need to be in a job center if they can work from home,” he said. “I would expect to see less demand and that corresponds to lower rents.”

Rents may decline in New York as well, according to a report released Tuesday by listings website StreetEasy.

“Residents moving out of the city, even temporarily, could drive rents across the city down,” StreetEasy said, pointing to the 10% decline that followed the 2008 financial crisis.

Young people have been a major force in the back-to-the-city movement in recent decades, helping revive moribund neighborhoods and nourish new businesses. It has also resulted in tight rental markets and higher prices, even for the cramped apartments that define the living arrangements of so many recent graduates.

Aside from making it less appealing to quarantine in a small space, the shutdowns have also had an enormous economic impact on young adults. Almost 15% of those ages 25 to 34 were unemployed in April, according to the U.S. Bureau of Labor Statistics, with more than a quarter in their early 20s out of work.

Breaking Leases

Even as young renters flee the city, freeing some inventory, the effect on New York’s market for starter apartments will be minimal, said Jonathan Miller, president of appraiser Miller Samuel Inc. That’s mainly because of the difficulty of breaking leases and the prevalence of co-living, he said.

In the short term, Miller expects to see rental activity increase in New York’s suburbs, where inquiries were already edging up before the pandemic.

Atlasa’s Kahramaner said he has also seen an uptick in demand for San Francisco’s suburbs, where bigger houses with yards are increasingly appealing as more people work from home and the city’s homelessness crisis worsens.

“People are leaving San Francisco to try to buy a house in Marin or East Bay,” he said. “People have a renewed interest in the suburban life.”

A lot of clients looking to buy are millennials, who historically have been less inclined — or less financially able — than their parents to become homeowners, Kahramaner said.

The Youngsters

“It was just so unapproachable,” he said. “They’ve been saving up cash and waiting for a recessionary environment where they might be able to get some sort of a discount.”

For the generation that came after millennials, such options are still a long way off. Daniel Chandross, 23, who works for Google, moved out of his Seattle apartment and is living with his family in the Midwest for the foreseeable future. He and his roommate, who works at Facebook, are still paying rent on the empty apartment, but their lease is up soon and they have to decide whether to renew.

With some tech firms telling workers they may not return to the office until next year, and expectations that remote work may continue even after the shutdown is over, that’s becoming a harder decision.

“We’re throwing around the option of moving our stuff into a storage facility,” Chandross said in a text. “No reason to waste money on rent if we can live/work at home ¯\_(ツ)_/¯.”

 


Article: Bloomberg – Apple News