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Rental Market Likely Headed for a Slowdown

April 22, 2020 /

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Bear Paw Development Corporation is a private non-profit organization created for the purpose of administering programs to help improve regional economic conditions in Hill, Blaine, Liberty, Chouteau and Phillips Counties and the Fort Belknap and Rocky Boy's Indian Reservations.
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While it is too early to know how COVID-19 will affect rental markets, early signs suggest another slowdown in demand is coming. Already, leasing activity is down at a time when new apartment completions are nearing a 30-year high. Cooling demand could soften rents at the high end of the market, but those benefits are unlikely to translate to lower rents at the bottom end as households compete for an already limited low-rent supply.

To begin with, a COVID-19 recession is likely to cool already slowing demand. Renter household growth boomed from 2004 to 2016, posting average annual increases of 846,000 households. After 12 years of robust growth, rental demand receded in 2017 and 2018 with net losses of renter households (Figure 1). While demand did pick up again in 2019, the gain of less than 400,000 households was well below the increase in any year from 2004–2016.

Whitney Airgood-Obrycki


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