Historically, vacancy rates increase during recessions. According to the US Census, vacancy on renter-occupied properties increased by 0.9%, 0.7%, and 2.4% during the 1990, 2001, and 2007 economic recessions respectively.
The current COVID recession is following a similar trend. According to Marcus and Millichap’s 2021 multifamily forecast report, multifamily vacancy increased by 0.2% – from 4.2% to 4.4%. Even though we are technically still in a recession as of this writing, an overall increase in vacancy is a good assumption, especially since an eviction moratorium has been in place since the onset of the pandemic.
Physical vacancy is an important metric for multifamily investors because it indicates the demand for apartment rentals. The closer to zero percent the vacancy rate is, the more demand for multifamily, and vice versa.
While absolute vacancy rates are relevant, understanding the vacancy trend is even better. Absolute vacancy rates provide a current snapshot of how demand in one market compares to another. However, vacancy trends show if demand is increasing or decreasing, which helps with future investment decisions.
In this blog post, I will outline the markets where vacancy rates decreased and increased the most during the current COVID recession.
| Rank | City | YoY Change | 2019 | 2020 | Rank | City | YoY Change | 2019 | 2020 | |
| 1 | Riverside-San Bernardino | -1.70% | 3.50% | 1.80% | 26 | Raleigh | 0.20% | 4.70% | 4.90% | |
| 2 | Las Vegas | -1.20% | 4.70% | 3.50% | 27 | Cincinnati | 0.30% | 3.30% | 3.60% | |
| 3 | Sacramento | -0.90% | 3.50% | 2.60% | 28 | St. Louis | 0.30% | 4.40% | 4.70% | |
| 4 | Detroit | -0.70% | 3.30% | 2.60% | 29 | Kansas City | 0.30% | 4.60% | 4.90% | |
| 5 | Baltimore | -0.70% | 4.80% | 4.10% | 30 | Oakland | 0.60% | 3.90% | 4.50% | |
| 6 | Atlanta | -0.60% | 5.10% | 4.50% | 31 | Dallas/Fort Worth | 0.60% | 5.10% | 5.70% | |
| 7 | Indianapolis | -0.60% | 5.30% | 4.70% | 32 | Houston | 0.70% | 6.30% | 7.00% | |
| 8 | Orange County | -0.40% | 3.60% | 3.20% | 33 | Los Angeles | 0.80% | 3.70% | 4.50% | |
| 9 | New Haven-Fairfield County | -0.40% | 4.40% | 4.00% | 34 | Orlando | 0.90% | 4.10% | 5.00% | |
| 10 | Tampa-St. Petersburg | -0.40% | 4.60% | 4.20% | 35 | Minneapolis-St. Paul | 1.00% | 3.30% | 4.30% | |
| 11 | Charlotte | -0.30% | 4.70% | 4.40% | 36 | Chicago | 1.00% | 4.90% | 5.90% | |
| 12 | San Diego | -0.30% | 3.60% | 3.30% | 37 | Miami-Dade | 1.00% | 3.80% | 4.80% | |
| 13 | Philadelphia | -0.20% | 3.50% | 3.30% | 38 | Seattle-Tacoma | 1.00% | 4.30% | 5.30% | |
| 14 | Phoenix | -0.20% | 4.00% | 3.80% | 39 | Washington, D.C. | 1.10% | 4.00% | 5.10% | |
| 15 | Cleveland | -0.20% | 3.70% | 3.50% | 40 | Nashville | 1.10% | 4.50% | 5.60% | |
| 16 | Fort Lauderdale | -0.20% | 4.40% | 4.20% | 41 | Pittsburgh | 1.30% | 3.20% | 4.50% | |
| 17 | Columbus | -0.10% | 4.20% | 4.10% | 42 | Boston | 1.50% | 3.40% | 4.90% | |
| 18 | Portland | -0.10% | 4.50% | 4.40% | 43 | Austin | 1.60% | 4.60% | 6.20% | |
| 19 | West Palm Beach | -0.10% | 4.70% | 4.60% | 44 | New York City | 1.70% | 2.00% | 3.70% | |
| 20 | Salt Lake City | 0.00% | 4.20% | 4.20% | 45 | Northern New Jersey | 1.70% | 4.40% | 6.10% | |
| 21 | Denver | 0.00% | 5.10% | 5.10% | 46 | San Jose | 2.20% | 3.90% | 6.10% | |
| 23 | Louisville | 0.10% | 4.80% | 4.90% | 47 | San Francisco | 6.60% | 5.10% | 11.70% | |
| 24 | San Antonio | 0.10% | 6.20% | 6.30% | ||||||
| 25 | Milwaukee | 0.20% | 3.50% | 3.70% | United States | 0.20% | 4.20% | 4.40% |
Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.