Renters currently have the upper hand in the housing market, as apartment units are staying on the market for longer, vacancy rates are rising, and rental growth is slowing. Landlords are now offering sweeteners like free parking and free rent weeks to attract tenants. The share of rental listings on Zillow offering concessions has increased to 33.2% in July, showcasing that renters have more bargaining power. Deals and incentives are especially popular in major metro areas like Raleigh, Charlotte, Atlanta, Salt Lake City, Nashville, and Austin, where over half of the rental listings are offering sweeteners.
Young renters like Natalie Garcia and Rylee Dunham have taken advantage of these deals in their housing search in Arizona. Garcia received half off the first month’s rent at a one-bedroom apartment in Scottsdale, while Dunham secured a free month of rent by offering to fix a broken fence at a two-bedroom apartment in Gilbert. Despite these concessions, the cost of housing still remains a significant expense in the economy, with shelter prices accounting for nearly 90% of the monthly increase in consumer prices in July. While apartment rents have increased by 5.1% over the past two years, it is a deceleration from recent trends.
The shift in the balance of power towards renters has been driven in part by a building boom for apartments, with nearly 60,000 multifamily units completed in the United States in June, the biggest increase in supply since 1973. This surge in construction has made it harder for landlords to fill some units, resulting in a rental vacancy rate of 6.6%, the highest since 2021. Falling mortgage rates could also work to the advantage of tenants by encouraging some renters to enter the housing market. Zillow economist Orphe Divounguy advises renters to be proactive, informed, and leverage their bargaining power to make the most of the perks and deals landlords are offering.
Overall, the housing market is experiencing a shift in favor of renters, with landlords offering various concessions and incentives to attract tenants. Renters have more bargaining power, especially in major metro areas where over half of rental listings are providing sweeteners. Despite this, the cost of housing remains a significant expense in the economy, with shelter prices being a major contributor to consumer price increases. The building boom for apartments has increased supply, leading to a rise in rental vacancies and a shift in the balance of power towards renters. Falling mortgage rates could further benefit renters by encouraging potential buyers to enter the housing market. By taking advantage of these trends and being informed about their options, renters can make the most of the current housing market conditions.
