Where Have All the Houses Gone?

“I don’t think we’ve seen a housing market quite like this one,” said Jenny Schuetz, a researcher at the Brookings Institution. “And other recessions looked a little bit different, so that makes it hard to know what’s going on.”

In the run-up to the housing crash, home prices rose far faster than rents, meaning many homes were selling for prices that owners couldn’t support if they had to rent them out. Then after the bust, home prices fell in some markets as rents rose, with newly foreclosed owners flooding into the rental market.

Today, rents have fallen for reasons largely inseparable from the pandemic. Laid-off workers have had to double up with family or friends. College students who normally rent near campus have been at home instead. Some renters enticed by low interest rates have successfully bought a home. And the normal influx of new renters into cities — recent college graduates, immigrants, workers who’ve just landed a new job — has dwindled during the pandemic.

Recent research by Arpit Gupta at N.Y.U. and colleagues suggests that rents have fallen the most in close-in urban neighborhoods. These are also the places where it simply hasn’t made sense in a pandemic to pay a premium in rent to be near restaurants, bars, museums and downtown offices. This has followed another unusual pattern: Single-family rentals are behaving a lot more like owner-occupied houses (in strong demand), while condos look more like rentals (with weak appeal).

These unusual circumstances in the rental market make it all the harder to grapple with what’s happening on the home-owning side. The ratio of home prices to rents in many metros is now as high as it has been since the housing bubble — but it has spiked during the pandemic in part because rents have fallen, not solely because prices have soared.

Mr. Zandi, at Moody’s, said he wasn’t yet anxious about a looming disaster like the last housing bubble. But he says it is already worrisome that rising prices have boxed out many first-time and moderate-income home buyers, who for years to come may lose out on the benefits of locking in interest rates below 3 percent.

“I don’t think it’s red flares; I think it’s yellow flares,” Mr. Zandi said. “But if we have another year like we had in the past year, we’re going to have a lot of red flares going up.”