Softening Rental Market Forcing Landlords Into Conecessions
According to Fortune, even though median asking rent is near a record high, landlords are offering concessions to attract renters. This is because the rental market is softening in some parts of the country, with vacancies on the rise. The rental vacancy rate in the U.S. is now 6.3%, up from 5.6% a year ago.
Landlords are offering concessions such as one-time discounts and a few months free rent. Some landlords are also raising rents for existing tenants but not new tenants, to strengthen their returns without scaring off prospective renters.
Higher-end properties are coming under pressure in some markets as demand declines, while supply increases. Meanwhile, more affordable units are in demand, as there’s lower supply and consumers are less willing, or unable, to afford higher-end units at this time.
Rent growth has cooled over the past year due to slowing household formation, economic uncertainty, affordability challenges and an increase in rental supply.
The rental market varies across the nation. In the West, the median asking rent dropped 1.1% year-over-year to $2,469 in August. In the South, the median asking rent fell 0.3% to $1,673. However, the median asking rent rose 4.6% over the same period in the Midwest and 1.2% in the Northeast to $1,434 and $2,509, respectively.
This suggests that the rental market is cooling in some parts of the country, while it remains hot in others.