Rental prices have dropped in this market, and that was something we expected. Rents in Redwood City have been steadily rising over the last decade, but since April, rents have decreased. This isn’t terrible. We have only seen prices drop by about 0.3 percent, which is far less than markets like San Francisco (1 percent decrease) and Los Angeles (3 percent decrease). However, if you were planning to raise your rent at lease renewal time, you might want to rethink that. Tenants are going to demand that their rents match the market, even if they are able to pay and unaffected by the pandemic financially.
How COVID-19 is Affecting the Redwood City Rental Property Market
Gibson Portfolio • December 25, 2020
Real estate markets all across the country are adjusting to the economic uncertainty triggered by the COVID-19 pandemic, and the rental market in Redwood City is no different. The pandemic isn’t going away anytime soon, it seems, and investors need to be creative, flexible, and steadfast. We can work through any challenges that come up and we can even embrace some of the opportunities.
Let’s take a look at what COVID-19 means for us in Redwood City and the local areas.
Real Estate Remains Strong
The good news first – this pandemic has generally caused a slight drop in rental values and net collected rents, but there hasn’t been a complete stall in rent collections, and things are not nearly as catastrophic as some experts predicted months ago.
Most tenants who can pay rent are continuing to pay as normal. These are the tenants who were not financially impacted too much, and are simply working from home instead of going into work. For the tenants who have struggled to keep up with payments, most of the landlords and property managers we have been talking to report that everyone is working together. Rental property owners and managers have done a good job of working with their residents and remaining flexible during this unprecedented and uncertain time.
Smart Investors Are Flexible
If you had good tenant relationships in place before this, you’re likely in a stronger position than owners who had adversarial relationships with residents or didn’t communicate with them much. The CDC has deemed evictions to be a public health crisis. So, they’ve issued an eviction moratorium for residents who have been financially impacted by the pandemic.
This moratorium arrived at the end of the statewide eviction ban that was in place since March, making it extremely difficult for landlords to remove tenants who aren’t paying rent.
With the federal ban, you really have to work with tenants to get as much rent as possible. If you have residents who have lost jobs or seen their hours and pay cut due to the pandemic, the government benefits they’ve received are probably starting to wear thin. You’ll have to see what you can collect, and you’ll have to be willing to make compromises.
Rental property owners have been willing to do this over the last six months, and it’s going to have to continue. Collect what you can and negotiate the rest.
There also needs to be more flexibility in terms of how you’re leasing, managing, and maintaining your property. We’ve seen a huge trend in contactless showings. More owners are embracing self-showing technology so tenants can see properties safely. This is a huge shift in how properties are rented, but it ensures we’re able to continue renting those homes. Nearly every lease is now signed electronically and new safety precautions have gone into place for emergency and routine maintenance repairs.
Redwood City Rent Prices
Any decrease in rental value is unpleasant, but considering Redwood City is suffering less than other markets, we’re feeling confident that investors will be able to get through this period with as little loss as possible.
This pandemic has affected nearly everyone in some specific way. For real estate investors in Redwood City, it’s caused a bit of uncertainty and a little less cash flow. But, there’s also opportunity. If you’d like to learn more about how to leverage your investment properties now, please
contact us at Gibson Portfolio Management.
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