{"id":10393,"date":"2023-12-31T14:37:49","date_gmt":"2023-12-31T14:37:49","guid":{"rendered":"https:\/\/imsfund.com\/?p=10393"},"modified":"2023-12-31T14:37:49","modified_gmt":"2023-12-31T14:37:49","slug":"rents-show-biggest-decline-in-3-years-should-landlords-panic","status":"publish","type":"post","link":"https:\/\/imsfund.com\/index.php\/2023\/12\/31\/rents-show-biggest-decline-in-3-years-should-landlords-panic\/","title":{"rendered":"Rents Show Biggest Decline in 3 Years\u2014Should Landlords Panic?"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div :class=\"{ 'hidden': $store.proContent.showFullPrompt() }\">\n<section class=\"px-4 relative border border-slate-200 mobile-toc lg:hidden\" x-data=\"{open:false}\">\n<button x-on:click=\"open = !open\" class=\"flex items-center gap-4 my-2 border-none w-full\"><br \/>\n<svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"h-6 w-6\" fill=\"none\" viewbox=\"0 0 24 24\" stroke=\"currentColor\" stroke-width=\"2\"><path stroke-linecap=\"round\" stroke-linejoin=\"round\" d=\"M4 8h16M4 16h16\"\/><\/svg><\/p>\n<p class=\"font-semibold text-slate-800 text-base m-0 js-toc-ignore\">In this article<\/p>\n<p><\/button><\/p>\n<\/section>\n<p>Redfin\u2019s <a href=\"https:\/\/www.redfin.com\/news\/redfin-rental-report-november-2023\/\" target=\"_blank\" rel=\"nofollow noreferrer noopener\">November<\/a> rent report is out, showing that median rent prices declined by 2.1% year over year. This is the biggest decline since 2020, and renters nationwide will breathe a sigh of relief. Landlords and investors? Perhaps not so much, although there are regional variations that are worth exploring if you\u2019re planning on investing in real estate in 2024.\u00a0<\/p>\n<p>Asking rent prices have been dropping steadily since May 2022, when the median U.S. rental price shot up to <a href=\"https:\/\/www.redfin.com\/news\/redfin-rental-report-may-2022\/\" target=\"_blank\" data-type=\"link\" data-id=\"https:\/\/www.redfin.com\/news\/redfin-rental-report-may-2022\/\" rel=\"nofollow noreferrer noopener\">above $2,000 per month<\/a>. At that point, rents were growing at a monstrous rate of 15% year over year as a result of the pandemic-induced scarcity of available rental homes.\u00a0\u00a0<\/p>\n<p>The situation now is very different. The severe supply-demand gap has been steadily closing over the past year and a half, with new construction boosting supply\u2014to the point where some landlords have been struggling to find tenants and <a href=\"https:\/\/www.biggerpockets.com\/blog\/landlords-are-offering-more-concessions-as-the-rental-market-softens\" target=\"_blank\" rel=\"noreferrer noopener\">offering rental concessions<\/a> such as the first month rent-free or free parking. The rental vacancy rate rose to 6.6% in the third quarter of 2023, the highest level since the first quarter of 2021, which was during the era of COVID pandemic restrictions.\u00a0<\/p>\n<h2 class=\"wp-block-heading\">More Renters, Lower Rents<\/h2>\n<p>The apartment building sector is gaining momentum. New construction of apartment buildings rose by 7% year over year in the third quarter of 2023 to a seasonally adjusted rate of 1.2 million. This is the highest rate in the past 30 years. New construction starts in the sector are declining somewhat, falling 26.2% year over year in the third quarter, but the overall rate of new starts that have just begun is still historically high, standing at 1.2 million.\u00a0<\/p>\n<p>Redfin chief economist Daryl Fairweather interprets the data as a sign that \u2018\u2018rents have started falling in a meaningful way. Rising supply [\u2026] means renters have more good options to choose from.\u2019\u2019<\/p>\n<p>Rising supply isn\u2019t the only reason why rents are falling. There are larger socioeconomic factors at play. The biggest one is, of course, the nationwide shift toward renting as a longer-term option as homeownership becomes less and less <a href=\"https:\/\/www.biggerpockets.com\/blog\/afford-invest-real-estate\" target=\"_blank\" rel=\"noreferrer noopener\">affordable<\/a>.\u00a0<\/p>\n<p>Currently, 1 in 3 people in the U.S. are <a href=\"https:\/\/www.biggerpockets.com\/blog\/zillow-renter-survey-2023\" target=\"_blank\" rel=\"noreferrer noopener\">renters<\/a>; they rent for longer than before and are older than ever before. This trend toward longer-term renting is changing the status of renting from the short-term stopgap option before homeownership to more of a valid lifestyle choice. Fairweather says that \u2018\u2019with homeownership so expensive, renting has started to lose its stigma.\u2019\u2019<\/p>\n<p>The ongoing uncertainty about the economy is also contributing to declining rents. People are becoming more cautious about spending and a little more conservative about what they consider a reasonable amount to spend on rent than they were even a year ago.\u00a0<\/p>\n<h2 class=\"wp-block-heading\">What Does This Mean for Real Estate Investors?<\/h2>\n<p>If you\u2019re a real estate investor and these trends are making you nervous, there is a silver lining: The rental market is not uniform, and apartment buildings represent only one segment of it. While this segment is currently on a downward trajectory, Redfin predicts that 2024 will be a good year for the single-family home segment of the rental market. That\u2019s because there aren\u2019t as many single-family homes available to rent, while demand for this type of rental is growing.\u00a0<\/p>\n<p>This growth is driven mainly by millennial renters, many of whom are still priced out of homeownership but have a real need for more spacious family housing as they start and grow families. Family homes are also popular rental options for millennials who prefer working from home and sharing a house with friends.\u00a0\u00a0\u00a0<\/p>\n<p>As an investor, you should also consider the ever-prevalent regional differences in the rental market. While rental prices are declining overall, they are steadily growing in the Midwest. Rental prices in this region climbed a very healthy 4.6% year over year to an average of $1,434. Parts of the Midwest are experiencing something of a housing boom, with many renters attracted by the overall affordability of the region.<\/p>\n<p>It\u2019s a very simple pattern: As the economic outlook worsens and people become more aware of their spending, they look for cheaper areas to live. This migration causes rental prices to rise in the now-popular region, while the expensive areas experiencing the exodus see falling prices. Currently, all other U.S. regions are seeing these declines, following years of unprecedented rent increases during the pandemic.\u00a0\u00a0<\/p>\n<p>Want to know the one place you should be looking at as a real estate investor right now? It\u2019s Milwaukee. This Midwestern city is seeing a robust demand for affordable rentals, partly in response to the increasing unaffordability of homeownership. Owning a unit here is a sure bet, according to local Redfin real estate agent Keisha Tally: \u201cEvery time one of my own units goes vacant, I get a ton of applicants.\u201d\u00a0<\/p>\n<h2 class=\"wp-block-heading\">The Bottom Line<\/h2>\n<p>Identifying locally booming markets is a must for any investor right now, as these will continue offering opportunities for a reliable rental income in 2024 and beyond.<\/p>\n<div id=\"visibility-group-block_64dd561cede13\" class=\"visibility-group  hidden\">\n<div id=\"hero-block_62df1a82bfc88\" class=\"first:mt-0 hero-block py-4    has-background has-slate-200-background-color has-text-color has-theme-gold-color\">\n<div class=\"gap-10 lg:gap-20 flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n<div class=\"relative z-30 lg:w-1\/2 \">\n<main class=\"py-4\"><\/p>\n<p class=\"has-slate-800-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Find an Agent in Minutes<\/p>\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:18px\">Match with an investor-friendly agent who can help you find, analyze, and close your next deal.<\/p>\n<p><\/main>\n<\/div>\n<div class=\"lg:w-1\/2 first:mt-0 relative h-full lg:flex lg:items-center\">\n<img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/bpimg.biggerpockets.com\/https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/Agent-Finder-Block-2.png\" alt=\"find an investment-friendly real estate agent\" title=\"Rents Show Biggest Decline in 3 Years\u2014Should Landlords Panic? 2\"\/>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"wp-block-group is-layout-constrained wp-block-group-is-layout-constrained\">\n<div class=\"wp-block-group__inner-container\">\n<div class=\"wp-block-group__inner-container\">\n<div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n<div class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n<div class=\"relative z-30 w-full \">\n<main class=\"py-4\"><\/p>\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n<p><\/main>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<p class=\"italic\"><b>Note By BiggerPockets:<\/b> These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.<\/p>\n<\/div>\n<\/div>\n<p><br \/>\n<br \/><a href=\"https:\/\/www.biggerpockets.com\/blog\/rents-show-biggest-decline-in-three-years\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In this article Redfin\u2019s November rent report is out, showing that median rent prices declined by 2.1% year over year. This is the biggest decline since 2020, and renters nationwide will breathe a sigh of relief. Landlords and investors? Perhaps not so much, although there are regional variations that are worth exploring if you\u2019re planning [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":10394,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"fifu_image_url":"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/12\/rental-market-1024x517.jpg","fifu_image_alt":"","footnotes":""},"categories":[9],"tags":[],"class_list":["post-10393","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog"],"_links":{"self":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/10393","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/comments?post=10393"}],"version-history":[{"count":1,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/10393\/revisions"}],"predecessor-version":[{"id":10395,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/10393\/revisions\/10395"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/media\/10394"}],"wp:attachment":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/media?parent=10393"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/categories?post=10393"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/tags?post=10393"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}