Renters Who Abandoned Their City Apartments During Covid Are Coming Home to a Crazy Leasing Market

“The lifestyle there is incredible,” said Mr. Granit of Colorado. “But our life is here.”

Moving back home wasn’t as easy as they had anticipated, however. Before they left, the family had been paying about $11,000 a month for a triplex in Carroll Gardens, said Mr. Granit, 45, co-founder of the co-working space Mixer. When they returned in August, they found that rents had jumped about 30% and they couldn’t find a comparable rental in any of their desired neighborhoods. They started looking at homes for sale, too, but still came up empty-handed. At first they stayed in a Brooklyn hotel while searching for a new home, Mr. Granit said, but have since moved into an Airbnb near the girls’ school.

“We couldn’t find anything when we came back,” Mr. Granit said. “It’s just unbelievable what’s going on in the market right now. We left in a Covid market and came back in this hyper-crazy Brooklyn market.”

It turns out you can’t go home again. At least, that is the case for many of the Americans who left their homes in major metropolitan areas during the pandemic, relocating to the countryside for more living space and access to nature. Now they are returning in droves as vaccines become more widespread, employers call their workers back to the office and schools reopen for in-person instruction. They are arriving to find bidding wars and skyrocketing prices in their former neighborhoods, where everyone now wants the same things: outdoor space, a home office, and move-in readiness.

On the hunt

“It’s been wild,” said New York City real-estate agent Jared Barnett of Compass.

Many large urban areas where rents cratered during the early months of the pandemic have now seen rents rebound to levels higher than they were before Covid, according to the Apartment List National Rent Report. In Seattle, for example, the median rent fell by 20.2% between March 2020 and January 2021, Apartment List found. The median rent in the city in October was 15.4% higher than October 2020 and 1% above its March 2020 level. In New York, the median rent has shot up 18.9% between October 2020 and October 2021. It is now 2.2% higher than it was just before Covid. In L.A., rents have increased 10.4% over the past year. Only a handful of large cities, such as San Francisco and Minneapolis, still have rents discounted from pre-pandemic levels, Apartment List found.

“Since the start of the year, vacancies have fallen very quickly,” said Igor Popov, chief economist at Apartment List. “The people that are coming back, they’re not finding a lot of available inventory.”

The sales market has shown similar patterns. In the second quarter of 2021, the number of home sales in Los Angeles more than doubled from the same period of last year, reaching the highest total tracked since 2004, Miller Samuel found, while the median sales price rose annually for the ninth consecutive quarter. In Manhattan, the third quarter saw 4,523 home sales, the highest number in more than 30 years, according to Miller Samuel.

At the onset of the pandemic, “people from L.A. were trying to get out of L.A.,” often heading to Malibu or out of state, said Angel Kou, a Beverly Hills-based real-estate agent at the Agency. Now many have come back, he said, along with people from Canada and the Northeast seeking a warmer climate. And due to Covid, many people who travel to L.A. for business now prefer to rent a house rather than stay in a hotel, especially if they are traveling with family, he said. As a result, desirable homes for rent in Beverly Hills are hard to come by. “They get snatched up pretty quickly,” he said. “You have to move fast.” Due to increased demand, he said, rents there have increased between 5% and 10%.

In New York, “the market has come a very long way in a year,” said real-estate agent Tal Alexander. In particular, rentals in desirable doorman buildings are scarce, pushing some would-be renters to buy instead. “We haven’t seen a rental market like this in who knows how long,” he said.

Sam Moritz, a real-estate agent at EXR in Brooklyn, said his clients—many returning New Yorkers who moved away during the pandemic—complain of a “frenzy” in the rental market. “A lot of people realized, ‘It was cool, I tried this, but I was living in New York for a reason,’ ” he said.

Mr. Moritz, 31, speaks from experience. With the New York rental market moribund during Covid, he gave up his Bushwick apartment in September 2020 and relocated to Salt Lake City, where he bought a car, rented an apartment with a view of the mountains, and started working in real estate.

“Things were going really well,” he recalled. “I had built a whole life for myself.” But he tried skiing with a friend and hated it. And it bothered him how quiet the city was. “It’s a very small, sleepy city,” he said. “I was used to the excitement of New York.”

After four months, he decided the experiment was over. “One day I was like, ‘I don’t want this. I want to get back as quickly as possible.’ ” He packed his bags, sublet his apartment on Craigslist and started driving east. After hitting a snowstorm midway through the trip, he sold the car and boarded a plane for New York City. “I was like, ‘get me out of this adventure, get me back to Bushwick,’” he said. He lost money on the car sale, he said, but felt it was worth it to get home as quickly as possible.

Thanks to Covid, nearly all those who are returning have similar priorities, agents said: They want access to the outdoors and spaces large enough to work from home. That means competition is fierce to rent or buy properties that have those attributes, and home seekers are willing to pay up for them.

“It’s a very tight market for big units,” said Alain Azaria of Sotheby’s International Realty, Mr. Granit’s real-estate agent. “Everybody wants more space, and everybody wants outdoor space.”

Last year, Kyle Forsyth sold his home in the Los Angeles suburb of Westlake Village and moved to Texas with his wife, Amy, and four children. He has family in Texas, he said, and “we’ve always toyed with the idea of living there.” Plus, he expected California schools to remain remote for the year, while Texas schools were open for in-person learning. The couple’s mentality was, “let’s go try Texas,” said Mr. Forsyth, a real-estate adviser. “If we want to go back, we’ll go back and lease and figure out what’s what.”

In August 2020, the couple rented a house outside Dallas and enrolled their four children in school there. Once they were settled in Texas, however, the family missed home. Plus, “the weather was killing us,” Mr. Forsyth said. “We froze to death in the winter and the summer was hot. We were spoiled—in California the weather spoils you.”

After a year of “our Texas Adventure,” as he calls it, the family returned in August 2021 to Westlake Village, where schools were set to reopen in person. They started looking for a house to rent, since Mr. Forsyth feels the sales market is at its peak right now; he plans to buy in a few years when things calm down. But finding a new rental home was far more challenging than they expected.

“The lease market when we came back was very hard,” said Mr. Forsyth, 48. “When things come up, people pounce. Some people pay the whole year in advance.” He estimated that rents are 10% to 15% higher than when they left.

They also found that landlords were doing extensive background checks due to the eviction restrictions in place. “The background check was very strenuous,” he said. “They are calling everyone—really checking.”

The family ended up staying at the Westlake Village Inn for almost a month while searching for a new home. The process took twice as long as he expected, Mr. Forsyth said. Finally in September they found a house to rent for about $6,000 a month; the same property would have gone for about $5,000 per month pre-Covid, Mr. Forsyth said, and he suspects that his industry connections helped him secure the lease.

Home again, for now

Returning home seekers looking for a deal should try under-construction buildings or homes in need of major renovations, real-estate agents said. “For new developments that are not going to be completed in the near future, you can go there and do some negotiating,” said Mr. Barnett.

Moreover, the rental market tends to slow down across the country as winter sets in, Mr. Popov said, so home seekers should get a bit of a reprieve over the next few months. Still, “for the renters that are still looking to move, the prices are high and vacancies are few and far between,” he said. “It’s not an easy market to be searching in right now.”