Fewer independent landlords are planning to
raise rents this year, but tenants paying persistently higher rents
say it's likely to impact their home purchasing plans this
year
SANTA
CLARA, Calif., Feb. 8, 2024
/PRNewswire/ -- Over the past few years it's become more expensive
than ever to rent, and with rental affordability a pressing
national concern, landlords and tenants alike say it's impacting
their future plans, according to a new
Realtor.com® Avail Landlord & Renter
Survey released today. Fewer surveyed independent landlords are
planning to raise rents this year, but with more tenants paying
persistently higher rents in recent years, many renters say it's
likely to impact their home purchase plans this year.
"The once-hot rental market has been stabilizing and softening
year-over-year since May 2023, mostly
from a surge in new rental options coming to the market that gave
renters more to choose from. But the surge in rents and the sheer
number of renters, many of whom have held off on buying in recent
years, continue to minimize any potential price impacts that
increased rental inventory could have on the market," said
Danielle Hale, Chief Economist,
Realtor.com®. "The median asking rent in 2024 is
expected to drop only slightly below its 2023 level (-0.2%), but
with wages rising 4.5% in January and anticipated to continue
growing, even the modest decline in rent is giving households a
real break, reducing the share of each paycheck going toward
rent."
Fewer landlords raising rents this year
According to
the survey, while six in 10 landlords (60%) plan to raise rent in
the next 12 months, that percentage declined in recent quarters,
down from 65% in Q1 2023. The majority of surveyed landlords (69%)
noted they raise rent differently for renewals versus new leases,
with the most opting for 0-5% increases for renewals and 0-10%
increases for new leases. Among landlords who don't raise rents
differently for renewal versus new tenants, the majority (50%) plan
to increase rent between 0-5%.
Planned rent increases are inline with higher costs across the
board for many Americans, including landlords who are passing those
costs on to their tenants. The majority of landlords (60%) stated
that their ownership costs increased upwards of 10% in the past 12
months. Among landlords not planning to raise rents this year, 72%
cite their unit already being priced at or above local market
value.
Persistently high prices squeeze renters
The average
responding renter pays between $1,000
and $1,500 monthly, but the survey
found more renters are paying rents upwards of $1000–$2000 than in
previous surveys, indicating continued rent increases for many
across the country. In fact, 71% of surveyed renters noted a rent
increase when renewing their most recent lease. And relief from
high housing costs isn't in sight, with 35% of surveyed renters
anticipating future rent increases and 38% unsure if they will see
one, leading nearly two thirds (63%) to explore other housing
options besides renewing their current lease. Common reasons for
those not renewing leases included that the current rent was too
expensive (43%) and unaffordable rent increases (23%).
For some, staying put when a lease is up and negotiating rent
increases may help save money; the percentage of renters attempting
to negotiate rent increases when renewing their lease increased
from 28% in Q1 2023 to 34% in Q4 2023. This may be especially true
in 2024 as higher rental vacancy rates may mean landlords are more
interested in securing renewals.
Budget constraints put home buying plans on
pause
Rising interest rates and inflation are impacting home
purchasing plans for many renters looking at buying in the year
ahead, with 82% of surveyed renters noting the economy has had an
impact on their housing plans. Among renters who are not
considering a home purchase this year (71%), the majority cited not
having enough for a down payment (61%) and that interest rates are
too high (42%).
The proportion of renters considering purchasing a home in the
next 12 months decreased slightly from 30% in Q1 2023 to 29% in Q4
2023, with concerns about a lack of savings and their ability to
qualify for a mortgage increasing. That's not surprising, given
that two thirds of renters (68%) reported saving less each month
than they were 12 months ago.
Rental owners staying put on their
properties
Higher home prices and mortgage rates are
also impacting landlords' plans for investing in more rental
properties in the year ahead. Only 22% of surveyed landlords
reported plans to buy one or more rental properties in the next 12
months, not unexpected given that approximately 7 in 10 surveyed
landlords already have a mortgage on at least one rental property,
and would likely finance another purchase with a mortgage. The
majority of landlords have no plans to exit the market either: 73%
stated they don't plan to sell any units in their portfolio over
the next 12 months.
Methodology
Avail's quarterly survey of landlords and
renters was conducted online in the U.S. between Dec. 6-15, 2023. Approximately 2,419 landlords
and 2,241 renters were surveyed. The margin of error for landlords
is estimated at ±2.62% and ±2.72% for renters.
About Realtor.com®
Realtor.com®
is an open real estate marketplace built for everyone.
Realtor.com® pioneered the world of digital real estate
more than 25 years ago. Today, through its website and mobile apps,
Realtor.com® is a trusted guide for consumers,
empowering more people to find their way home by breaking down
barriers, helping them make the right connections, and creating
confidence through expert insights and guidance. For professionals,
Realtor.com® is a trusted partner for business growth,
offering consumer connections and branding solutions that help them
succeed in today's on-demand world. Realtor.com® is
operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV]
subsidiary Move, Inc. For more information, visit
Realtor.com®.
Media Contact
Sara
Wiskerchen, press@move.com
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SOURCE Realtor.com