Employment is down, and rental demand is up. That’s the narrative sweeping the country, and landlords are learning how to make lemonade from the lemons of low housing affordability.
As home sales collapse and inventory expands, a slow buyer’s market has turned into a hot rental one. Although an abundance of available rentals in the U.S. is “tipping [the market] in favor of tenants,” according to CREDaily, astute landlords can leverage demand in their favor.
Advantage: Renters
A surge in new apartments and slower rent growth (national average rents dropped 0.3% in September—the sharpest decline for that month in over 15 years, according to CoStar) follows years of steady rent increases. Apartment rentals are stagnant in many markets, according to CREdaily, with Austin, Denver, and Phoenix seeing the most significant rent cuts. In these and other markets, tenants are able to negotiate concessions like move-in specials, shorter leases, and upgraded amenities.
For landlords facing delinquency and turnover from cash-strapped tenants, leveraging the need for housing means being flexible: balancing affordability for tenants with ensuring their long-term residency.
Job Anxiety
RentRedi data for October showed that 83.5% of tenants paid their rent on time; however, with greater economic uncertainty, including a prolonged government shutdown (now the longest in history), that could change.
It’s already affecting the homebuying market, with over 15% of home purchases falling through in the summer, the highest rate for that time of year since 2017. This increase is boosting inventory in the Sunbelt.
“What you don’t forecast is…