Effective asking rents in Class C apartments have been more resilient than their Class A and B counterparts in the wake of the COVID-19 pandemic. While Class A and B units saw cuts in asking rents in the year-ending 2nd quarter 2020, Class C asking rent change remained slightly positive at 0.8%. In fact, 39 of the nation’s largest 50 markets saw flat to positive rent change among the Class C space in the past year. The strongest performers were geographically diverse, headed by Orlando, Sacramento, Memphis, Pheonix and Miami. On the other hand, underperforming markets were overwhelming those located in the more expensive coastal markets. The strong performance of Class C product may point to the CARES Act benefiting Class C renters most significantly. Many Class C renters work in industries seeing the largest share of layoffs and furloughs. Further, rent-to-income ratios in Class C units had historically been the tightest. But with the CARES Act providing a $600/month stipend, many laid-off workers are seeing overall higher wages than they were before the pandemic. The benefit of the CARES Act does diminish, however, in the more expensive markets.
