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It’s not just a buyer’s market. Renters are getting the upper hand as property managers cut rent and offer concessions.
Recently released data shows that, while high home prices are keeping more people renting, a rush of new supply in markets across the country is helping to drive an ongoing slowdown in the rental market.
“We’re seeing most major markets settle into their new resting heart rates,” Zumper CEO Anthemos Georgiades said. “Miami, for example, is more expensive than pre-pandemic; but it’s no longer seeing steep hikes month after month.”
Rent is now less expensive compared to last year in half of the top 100 cities Zumper tracks. The company suggested the nation was entering a “renter’s market.”
It now costs $1,499 per month to rent a one-bedroom home and $1,856 per month for two bedrooms. That’s a month-over-month drop of 0.4 percent and 0.3 percent, respectively.
Apartment List released its own set of data on Tuesday that showed rent is down 1.1 percent so far this year.
Still, rent is about $250 more per month now than it was three years ago, Apartment List said.
All eyes are now on changes in supply as builders complete projects that got financed and broke ground before the commercial real estate market all but froze this year.
“Looking further ahead, a robust construction pipeline should drive strong supply growth in the year ahead,” Apartment List said. “On the other hand, the extent to which demand rebounds or remains sluggish will likely depend on broader macroeconomic conditions.”
Renters now have more options to choose from. That’s leading to a rise in concessions being offered to renters, often in the form of free rent for a period of time, an alternative to dropping the monthly cost of rent.
Forty-three of the nation’s 50 largest cities have seen a rise in rental concessions compared to last year, according to Zillow. The cities with the most concessions were Salt Lake City, where 54.4 percent of rentals offered concessions, followed by San Jose at 50.8 percent, and Washington, D.C., at 49.6 percent.
“The pandemic era’s increase in concessions was a direct response to decreased renter demand. Currently, we’re witnessing a different scenario where the demand for rental housing is high, but there’s been a notable rise in supply,” Anushna Prakash, an economic research data scientist at Zillow, said. “To differentiate themselves from newer, potentially more amenity-rich apartment buildings, property managers are stepping up their game, offering more incentives to attract potential renters with a broader range of choices.”
More than 50 percent of rentals available in Salt Lake City offered some sort of concession, the highest such figure in the nation, as Utah’s capital city sees a rush of new supply come online all at once.
“In multifamily, apartment construction hit 50-year highs and deliveries are peaking now through 2024. Apartment demand remains very solid, but closer to ‘normal,'” Jay Parsons, chief economist at rental data firm RealPage, wrote. “Not blazing hot re-acceleration to 2021 levels. And not enough to keep pace with supply. So rent growth has flattened out, and has gone negative across much of the West Coast and the Sun Belt where supply is heaviest.”
The reports were the latest to find regional variabilities in rent changes.
A one-bedroom apartment in New York City, for example, costs a record $4,300 per month, 13.5 percent more than a year ago, Zumper found.
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