Property managers' race to woo tenants eases,
signaling a tighter market for renters this spring
SEATTLE, March 20,
2024 /PRNewswire/ -- After a winter that saw nearly a
third of rental listings offering tenants tempting concessions such
as free months of rent or free parking, Zillow's latest data
reveals the share of rentals offering perks may have hit its peak.
The good news for renters is that the market is friendlier than it
was a year ago, with the share of rentals offering a concession
rising 5.6 percentage points.
As spring approaches, February data show 32.2% of rental
listings on Zillow offered a concession, down slightly from
December and up 5.6 percentage points from a year earlier. That
marks the slowest annual growth pace since last June. After seven
months of consecutive monthly increases to end 2023, the share of
rentals offering concessions fell to 31.9% in January before a
slight uptick last month.
If past seasonal trends continue to hold, renters looking to
secure a new lease in the upcoming spring or summer may encounter
fewer incentives and increased competition.
"The rental market always ebbs and flows with the seasons, so
it's no shock that we're seeing concessions start to level off as
we move into the warmer months," said Anushna Prakash, an economic
research data scientist at Zillow. "It looks like we're beginning
to see the market balance the ongoing high demand from renters with
a competitive environment for property managers and landlords.
While concessions are beginning to dip, they are more common than
they were a year ago, helped by new buildings that have opened
their doors."
While the expected seasonal shift accounts for the stabilization
of concessions, the pace of rent growth and vacancy levels offer
deeper insights. Recently, rents haven't been going up as
quickly as they did before the pandemic, and it looks like supply
and demand are starting to balance out. The share of rental housing
units that were vacant was at 6.6% in the fourth quarter of
2023, which is just a bit higher than the nearly forty-year low
seen at the end of 2021. This indicates there are enough eager
renters, nudging the market toward stability.
The Metros Leading the Concession Charge
Despite the national trend toward stabilization, certain markets
continue to lead with high shares of concessions. These metros
exemplify the diversity within the rental market, with strategies
varying widely across regions to attract tenants.
10 Metro Areas with the Largest Share of Rental
Concessions
Metro
|
Share of Rentals
w/ Concessions
|
Year over Year
(YoY) Change in
Share of
Concessions
|
Typical Rent in
Zillow Observed
Rent Index (ZORI)
|
YoY Change in
ZORI
|
Salt Lake City,
UT
|
60.3 %
|
+ 22.9 percentage
points
|
$1,656
|
1.6 %
|
Austin, TX
|
55.0 %
|
+ 17.9 pp
|
$1,735
|
-3.0 %
|
Charlotte,
NC
|
53.5 %
|
+ 19.0 pp
|
$1,775
|
1.7 %
|
Dallas, TX
|
50.7 %
|
+ 13.5
pp
|
$1,747
|
0.5 %
|
Raleigh, NC
|
50.6 %
|
+ 13.4 pp
|
$1,747
|
1.2 %
|
Nashville,
TN
|
49.9 %
|
+ 9.9 pp
|
$1,874
|
0.7 %
|
Washington,
DC
|
49.4 %
|
- 2.9 pp
|
$2,273
|
5.1 %
|
Minneapolis,
MN
|
49.4 %
|
+ 4.3 pp
|
$1,615
|
2.9 %
|
Phoenix, AZ
|
48.8 %
|
+ 8.6 pp
|
$1,846
|
1.4 %
|
Denver, CO
|
48.1 %
|
+ 8.5 pp
|
$2,007
|
3.1 %
|
United
States
|
32.2 %
|
+ 5.6 pp
|
$1,959
|
3.5 %
|
In nine of the ten metros where the share of rental concessions
is highest, rents are growing more slowly than the nationwide 3.5%
annual rate, and they are outright falling in Austin. This could mean there are more
apartments available than there are people looking to rent
them.
On the other hand, areas where there are fewer of these kinds of
deals available, such as Providence,
R.I. (12.3% of rentals offered concessions in February),
Hartford, Conn. (16.3%), and
Cincinnati, Ohio (18.9%), are
seeing some of the fastest rent increases. In Providence, typical rents have jumped by 8.1%
since last year. Hartford and
Cincinnati both saw rents increase
by 6.4%.
Zillow provides a user-friendly platform for housing providers
to share concessions information with prospective renters. Property
managers can easily list concessions for their properties, and
renters can find all available offers under the "Special Offers"
tab on participating building detail pages, enabling them to make
well-informed housing decisions.
About Zillow Group
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#10287 (www.nmlsconsumeraccess.org). © 2023 MFTB Holdco, Inc., a
Zillow affiliate.
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SOURCE Zillow