Following several years of significant growth, 2023 marked a cooldown in the rental market. With demand leveling out and inflation rising, rent price increases have declined since their peak in February 2022. High mortgage rates, elevated prices, and economic uncertainty have made investors more reluctant to acquire new properties.
Since the pandemic, the rental market has experienced a rollercoaster of changing tenant preferences and economic conditions. So, what’s coming in 2024? Every new year comes with surprises, but here are some likely trends:
1. Many multi-family units currently under construction will open in 2024. With the increased supply of rental units, potential tenants will have more options and increased leverage to negotiate rental terms.
2. Current homeowners who have locked in low mortgage rates are reluctant to sell. Low housing supply and soaring prices are shifting many would-be homeowners to the rental market. Couples with children and multi-generational families will seek the space and privacy of single-family rental homes.
3. Employees have been spending more time at their workplaces recently, but remote and hybrid jobs are here to stay. Tenants who work from home will be seeking properties with potential workspace. And having fewer commuters will provide growth opportunities for rural areas.
4. As more Americans near retirement age, senior housing will continue to be one of the fastest-growing rental markets. Older residents will search for accessible, affordable housing in communities that meet their changing needs.
5. The highest potential for rental market profits is in fast-growing Sun Belt cities like Phoenix and Austin. Smaller cities with less competition from new construction will also appeal to landlords, expanding their portfolios.
6. Technology use will continue to rise, especially as artificial intelligence gains prominence. More renters expect to handle transactions like maintenance requests and rental payments through a seamless online interface.
7. With costs rising faster than wages, many households feel a financial pinch. Debt is rising, and savings are declining, making qualified tenants harder to find. States and local communities will continue promoting efforts to meet the increasing need for affordable housing.
While many economic indicators look strong going into 2024, inflation and high housing costs fuel a lack of confidence among American consumers. Landlords can navigate this uncertainty by leveraging technology to operate more efficiently. They can embrace innovation to maintain current tenants and attract new applicants. Awareness of market changes and trends is critical to keeping your business current. But don’t lose sight of your long-term strategy as you ride out the opportunities and challenges each new year brings.
About Rentals America
Rentals America provides full-service property management for residential rental properties. Our team is completely dedicated to property management, and we’re here to help landlords navigate the rental market
