As many leases near their expiration, landlords will seek to find qualified tenants to move into their properties, while tenants will embark on a search to find a new rental place to rent that best suits their priorities. Understanding the current trends in the rental industry will help both landlords and tenants navigate this changing landscape.
Homeownership is disappearing from the american dream
Buying a home was once seen as the pinnacle of the American dream. The influx of millennials into the rental market has proven that this is no longer the case.
Millennials want the flexibility to move to different cities and are more willing to accept jobs that are in a new location. Buying ties them down and they don’t want to make that big of a commitment. This means they are better suited for renting because of the large upfront cost in buying and because it takes several years to break even with the investment of buying a home.
Of course, there are many factors that an individual must weigh when determining whether or not it makes sense to buy a home. For some it may be the right decision, but the average age of the first time homebuyer has been rising and it will likely continue to go up. Some other contributing factors include rising mortgage rates and the amount of student debt that many millennials carry.
What does this mean for landlords?
As homeownership has more financial barriers and can be a less appealing lifestyle choice for individuals who may not be ready to put down roots in one place, this means there are more renters in the market. With more people looking to rent, there will be less vacancies and a bigger selection of prospective tenants, increasing the likelihood of finding a more qualified candidate.
What does this mean for tenants?
More competition. To help separate yourself from the rest, make sure your credit is in good shape, as a low credit score or payment history can be an immediate disqualifier for many landlords.
Renting is affordable
Though renting is increasing a bit overall, it is still cheaper than home affordability in most places, according to the 2019 Rental Affordability Report released by ATTOM Data Solutions. The report showed that renting a three-bedroom apartment was more affordable than buying a median-priced home in 59% of counties in the United States. The same study found that in 2018 the average price of homes in America rose 6.7%, compared to the average monthly rent which only rose 3.5%.
Last year, there were very low vacancies for landlords and apartment owners. Even more, The National Apartment Association predicts a 95% occupancy rate for 2019. This means that owners will not have to offer big incentives that were common when occupancy rates were lower and can also charge slightly higher rent prices. Developers are also responding to these trends by building more apartments to meet the demand.
What about rent prices in my city?
While national trends certainly are important to observe, there are many different local factors that influence rent prices in the locations where you own properties or are looking to rent. Rental search site RENTCafe, released a report comparing average rent prices for 2018 and their year-over-year increases.
Tech solutions are rising
Both landlords and tenants are moving toward online options when it comes to managing their properties, finding places to rent, and paying rent. There are many aspects of successfully managing a rental property and more and more landlords are turning to online solutions when it comes to things like collecting payments, creating leases, and finding qualified candidates.
Landlords who use online solutions for things like rental applications, electronic signatures of leases, and online rent payments are able to provide a better experience for their tenants. Do not underestimate the positive impact that these solutions can make on attracting tenants and retaining good tenants when you are able to provide them a pleasant experience. Most tenants in 2019, do not expect to have to fill out paper forms, write checks, or send things by mail. Another benefit this brings to the landlord is that they are 6% more likely to receive their payments on time when compared to landlords who don’t offer online payments.
It’s easier than ever for tenants to find their next rental because of all the online resources available. While pictures are still the primary means of attracting tenants to your property, one emerging trend is virtual showings. Virtual reality technology and 360 video give tenants anywhere in the world the ability to see into the property as if they were actually standing inside.
When landlords understand the minds of tenants and are aware of emerging trends, they’ll be more successful in operating their businesses and have a leg up on their competition.