You are reading: Renting Statistics To Know For 2023
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The housing market has undergone some significant changes over the past few years. We’ve seen rent prices skyrocket across big cities, while other areas have experienced a slower rate of growth. The COVID-19 pandemic threw a wrench into many renters’ plans in 2020, forcing them to move in with family or friends. Three years later and we’re still seeing the lasting effects of those market changes.
On top of market changes, there are new trends and technologies emerging that property managers need to be aware of if they want to stay competitive. In this post, we’ll take a look at nationwide renting statistics to give you a sense of what’s happening in the rental market today and review the latest trends and patterns in the industry. So let’s get started!
Rents Rise Across the Nation
As of July 2022…
- The asking rent was 77.1% higher than the nationwide median gross rent in 2020
- The asking rent was 12.95% lower than the average monthly mortgage payment
- Rental rates increased 31% over the last 10 years
- 41% of renters spend over 35% of their income on rent
According to NerdWallet, these cities have had the highest YOY increase:
- Cincinnati (+9.2%)
- Boston (+8.7%)
- Louisville, Ky. (+8.3%)
- Indianapolis (+8.2%)
- Providence, RI (+7.8%)
Rent growth has been slowing since its 17% peak growth in February 2022. Even with a steady decline, rent prices still higher than ever. But why are rents rising? One major reason is inflation. 2022 saw the highest inflation rate since the 1980s. As everything rises is cost, property managers and landlords pass on those higher costs to renters.
There has also been a lack of inventory. There are fewer vacant rental properties available in general, particularly affordable ones. Investors prefer to build high-end luxury properties that don’t require a complete overhaul or lots of maintenance. These units aren’t attainable for the average renter.
Property managers are attempting to make up for pandemic-era rent freezes and discounts by increasing their prices on new units and lease renewals. Another pandemic effect was the push for everyone to work from home. As the popularity of remote work increased, renters started seeking homes in the suburbs instead of downtown areas near an office.
Prospective homeowners have been forced to remain renters for longer as they encounter high demand and low inventory of existing homes, rising mortgage interest rates, and supply chain issues that have made it more expensive and difficult to build new homes.
- 34% (44 million) of U.S. households are renters.
- 4% of renters are under 35.
- The national median rent exceeded $2,000 in 2022
- New York, California, and Massachusetts are the most expensive states in which to rent.
- The median rent-to-income ratio for renters is 57%, or 2x the recommended 30% ratio
The younger demographic, specifically those aged 18 to 34, typically prefer renting so they have the freedom to move frequently for new career opportunities and try out living in a variety of cities and neighborhoods. According to a study from Harvard University, single people are more likely to rent than couples, regardless of whether or not they have children.
Additionally, the high cost of homeownership has deterred many from buying a home in recent years, making renting the better option. Interest rates have soared, supply has been hard to come by, and competition has been stiff.
New Technology Matters
Utilizing new technology can provide numerous benefits to property managers. From communicating with tenants to marketing the property to online maintenance requests, new tech platforms and tricks aren’t just nice to have but are a necessity in 2023. These advancements not only make managing properties more efficient but also have a positive impact on tenants.
One of the most significant benefits of this new tech is the ability to create immersive virtual tours that give prospective tenants a realistic feel for what it would be like to live in your property. Social media platforms and online advertising allow property managers to increase their visibility to potential renters.
User-friendly, interactive websites that are optimized for mobile use make it easier for prospective tenants to find and apply for rental units. These new tech tools help property managers improve their rental process, attract more qualified tenants, and increase occupancy rates, ultimately benefiting the business and the tenants alike.
Using software to manage maintenance work orders can make a big difference, too. Platforms like Property Meld and DoorLoop help ensure faster turnaround times and better service.
Millennials typically have different standards when it comes to renting an apartment. Most have an interest in long-term health and wellness, meaning that property managers and owners should consider providing living experiences that address their health-focused needs. To boost resident retention, you can offer fitness opportunities that also function as social activities. Think group yoga classes or interactive spin classes.
Millennials are often more inclined to look for apartments with rooftop terraces, open lobbies, and places nearby where they can enjoy the scenery in a social setting. Sponsoring game nights, movie nights, and cooking classes is a great way to attract new residents and hold on to current ones.
When it comes to housing, millennials seek apartment communities that are environmentally conscious, meaning that they are equipped with solar panels, electric car charging stations, on-premise ride-sharing programs, smart thermostats, and energy-efficient mechanical systems. According to the NAA, Millennials moving into cities are actively choosing low-maintenance, urban-based experiences that exist in walkable, bikeable, or transit-oriented locations.
By forcing property managers and developers to support their lifestyles, millennials are changing the rental housing industry. In order to attract and retain these residents, developers are reworking their rental incentives to include nutrition, fitness, social networking, and environmentally safe practices in their properties.
The Rise of Fraud
So you’ve heard of credit card fraud, but have you heard of rental application fraud? In recent years, prospective renters have turned to altering bank statements and pay stubs to help them secure a rental. A few small edits and their pay stub now states that they make three times as much as they actually do. Some even go as far as hiring shady companies to help them doctor their documents.
How do they do it? It’s simple — with advancements in technology, there are a plethora of tools available to create fake documents. Not only is this unethical, but it presents big problems for property managers and owners when undetected.
Once that tenant is in your property, your risk factor goes up. They may miss rent payments or damage your property. It’s a nightmare scenario for property managers and once that can cost them a lot of money. That’s where advanced screening platforms like Snappt can help.
Snappt can detect whether a document has been altered or forged, saving you significant time, money, and energy that you would have to spend evicting shady tenants and repairing damage caused by them. It’s the best way to prevent fraud, protect your property, and ensure that you’re only renting to reliable and trustworthy tenants.
To Sum Up…
The rental landscape has changed dramatically in recent years, but that doesn’t mean property managers have to struggle. Keeping up with trends, implementing new technology, and studying relevant renter statistics can put you on the path to success.