The recent boom in apartment construction has stabilised rental prices, and the increased choice available to tenants means landlords may have to sweeten the deal.
Rents have skyrocketed during the pandemic. But things have changed, with landlords and property managers offering concessions to attract residents — and to keep their apartments from sitting empty, according to Zillow. Local Our offers can range from weeks or months of free rent, reduced security deposits, discounted Wi-Fi or parking, and even help moving furniture into a new home.
More multifamily homes were completed in June than any other month in nearly 50 years, “opening up new options for renters and spreading demand for more homes,” Zillow chief economist Skylar Olsen wrote in a monthly report. Research reportLast month, just over 33% of rental listings on Zillow nationwide included a waiver; a year ago, about 25% of rental listings offered some kind of waiver.
But don’t be fooled: Rents are still high, albeit rising more slowly. The typical rent rose less than half a percent in July to $2,070. That’s up more than 3% from a year ago, but since the pandemic began, rents are up 33%. There’s some variation when it comes to single-family versus multifamily rents. Single-family rents are up about 5% from a year ago and 40% since the pandemic began. Multifamily rents are up about 3% from a year ago and more than 27% since the pandemic began.
However, this recent trend is a boon for renters, but not for landlords. And in some areas, it’s particularly severe. In six major metropolitan areas, more than half of rental listings on Zillow are offering concessions: Raleigh, Charlotte, Atlanta, Salt Lake City, Nashville and Austin. Austin was the only metro area where rents fell from the previous month, and Raleigh is contending with one of the highest rental vacancy rates of any major metro area.
On the other hand, in more competitive metropolitan areas where there hasn’t been much relief, fewer listings mention concessions. San Jose, Baltimore, Milwaukee, and Pittsburgh all have smaller shares of rentals offering deals. San Jose, like many other cities in California, has a housing shortage, so falling rents, high vacancy rates, and falling demand don’t typically pose problems for landlords there.
But even so, the market is still nowhere near the heat it was during the pandemic. “Rather than a reflection of low demand, the massive influx of new apartments hitting the market is likely the reason that demand is being spread across more listings,” Olsen wrote. “This is a hallmark of a healthier market with a better balance between supply and demand.”
Indeed, half of all renter households were considered cost-burdened in 2022, meaning they spent more than 30% of their income on housing. That’s about 22 million U.S. renters, according to the Joint Center for Housing Studies at Harvard University. Hopefully, this is a step toward lower costs for renters. But what lies ahead depends on what happens.
“The question now is whether the current status quo of slowing rent growth and increasing concessions will continue, or whether rents will actually fall,” Olsen said. “The recent decline in mortgage rates could dampen rental demand as more families are able to afford to buy a home. The slowing labor market could also contribute to lower rents.”
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