Statistics show that more and more Americans are opting for renting over buying. In this blog post, we’ll break down the data trends by area and look into what this means for you as the property manager.
Americans who are renting their homes (as opposed to buying) are on the rise. Also increasing: the average U.S. apartment rent, according to a recent report by RentCafe. The study reveals that the average American rent reached $1,436 in April 2019. This means the average rent increased 3 percent — or $42 — year over year and has increased five dollars over the previous month’s (March 2019) average rent.
Rents are actually below the national average in most American cities. Of all the states in the Union, Texas shows the lowest month-over-month increases.
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Markets with the highest rents bring no surprises. New York (specifically Manhattan), San Francisco and Washington D.C. demand the highest rental prices. Chicago is more moderate, but rents are increasing in Miami, Phoenix and Las Vegas. Los Angeles rents are also on the rise, with a dramatic $122 year-over-year increase. The one market where rent prices are actually declining, albeit slightly: Denver.
Occupancy rates remain high, according to a recent REIS report. American apartment vacancy rates remain flat (4.8 percent), only rising in 15 of the 79 major cities studied. Another surprise: net absorption dropped by a dramatic 21.6 percent.
Renting may prove to be better than buying, according to research by Attom Data. Its 2019 Rental Affordability Report reveals that home prices are outpacing wages in 80 percent of U.S. markets. Renting a three-bedroom property is more affordable than buying a median-priced home in 442 of 775 U.S. counties. That’s 59 percent!
The study goes on to show that, in 37 or 40 counties of one million or more (93 percent), renting is more affordable than buying. These markets include Los Angeles County (California); Cook County (Chicago), Illinois; Harris County (Houston), Texas; Maricopa County (Phoenix), Arizona; and San Diego County, California.
The U.S. rental property market is a growing portion of the estimated $127 trillion global real estate market, which makes up 60 percent of all mainstream assets, according to ManageCasa.com.
What’s driving the rental housing market phenomenon? A still-recovering (but solid) economy, increased housing costs, increased immigration, and a growing demand from Millennials and Baby Boomers.
Read our blog post on what Generation Z expects as tenants.
The Urban Institute projects that the demand for apartment rentals will continue to rise:
“Our analysis projects that from 2010 to 2030, the growth in rental households will exceed that of homeowners by 4 million, with an increase of 13 million rental households and 9 million homeowner households. That’s five renters for every three homeowners. Compared with the previous 20 years, the increase in homeowners was almost twice that of renters, even with the housing crash: 8.8 million new rental households and 16.1 million new homeowner households.” — from blog post on urban.org.
Cities with the youngest renters will have the most renters, according to ManageCasa.com.The most “youthful” states currently include Texas, Utah, and California.
CNBC reports that rental demand in the second quarter of 2019 jumped 11 percent from the same time a year ago, according to Real Page research. A survey from Freddie Mac shows that 82 percent of renters claim that renting is more affordable than owning. That’s increased an incredible 67 percent from the same time last year. The same survey found that perceptions of affordability of renting is shared across generations. Millennials (up 14 points to 75 percent), Generation Xers (up 11 points to 78 percent), and Baby Boomers (up eight points to 81 percent) all show definite increases in the perception that renting is more affordable than owning.
Freddie Mac also finds that 63 percent of renters continue to express their satisfaction with their rental experience. Drilling down deeper, 58 percent of renters believe that renting is a good choice for them now and do not have plans to buy a home at this time – up from 54 percent in February. In fact, 66 percent of renters plan to continue renting when they move again. That’s up 11 points from the last survey.
What are the reasons for low tenant satisfaction? Find out here.
Are you ready for the increase in renters — and are you prepared to keep them?
Tenants love amenities, especially the ones that will give them peace of mind and help them in a pinch. Here’s one: providing onsite access to a trained and dedicated operator who can offer effective help in the event of an emergency. Kings III Emergency Communications is a 24/7/365, people-staffed, full-serviced emergency telephone monitoring service. Your tenant’s location is already fixed and known, programmed and ready for action. That means proper response starts more quickly and sends help to the right place without guesswork. Medical instruction is also available if needed. What you are showing your tenants: concern for their welfare and security, with a constant, dedicated commitment. What you can show yourself: reduced liability and cost.
Kings III all-inclusive services offers code-compliant emergency telephone equipment with installation, maintenance, and 24/7 monitoring, and dispatch services.
Find out more and increase tenant satisfaction by contacting us.