The State of Real Estate for Renters: trends, challenges and opportunities.
Amanda Spicer
Digital CSM
The real estate industry has always been very dynamic, but recently, it has undergone significant shifts that have impacted renters. As the housing market continues to evolve, renters find themselves navigating a difficult environment influenced by economic conditions, changing demand, and new trends.
Let’s take a closer look at the current state of the real estate industry for renters, including some challenges they face and opportunities that are coming.
rising rental costs.
One of the most pressing issues for renters today is the continuous rise in rental costs. Across urban and suburban areas, rental prices have skyrocketed, making it increasingly difficult for many to afford housing. An analysis of Zillow and StreetEasy’s rental data shows that rent prices across the US are increasing at a faster pace than wages, especially in major cities like New York. This mismatch between rising rents and stagnant wages means a larger portion of people’s income is going towards housing, making affordability more difficult and unrealistic. Several factors contribute to this trend, including:
- High Demand & Low Supply: The demand for rental properties has outgrown the supply, particularly in high-demand areas like major cities and hubs. This imbalance is contributing to higher costs, leaving renters with very few affordable options.
- Inflation & Economic Pressures: As inflation affects the entire economy, owners are often compelled to raise rents to cover their costs for property maintenance, taxes, and utilities.
- Post-Pandemic Market Adjustments: The COVID-19 pandemic led to fluctuations in the rental market, with some areas experiencing temporary rent drops. However, as the market has rebounded, rents have significantly increased.
For renters, these rising costs mean that budgeting for housing requires careful planning and may require exploring alternative living options. We have seen an influx in sharing spaces, tiny living, or relocating to less expensive areas.
the shift toward suburban and rural rentals.
The pandemic has accelerated a trend toward suburban and rural living. With the rise of remote-first work, many renters are no longer tied to urban areas and are seeing more space and affordability in suburban or rural areas. This shift has resulted in:
- Increased Demand in Suburban + Urban Areas: Suburban and rural areas have seen a surge in demand for rental properties. This increase is now driving up rents in these areas.
- Changing Rental Market Dynamics: Owners in traditionally less competitive markets are finding themselves in a stronger position, able to demand higher rents and offer fewer concessions.
For renters, this trend opens up opportunities to find more spacious and affordable housing, but it also requires adjusting to different lifestyles and potentially longer commutes for in-person work.
the rise of build-to-rent communities.
A huge development in the real estate industry is the rise of build-to-rent (BTR) communities. There are residential developments specifically designed for renting rather than selling. BTR properties offer a wide range of amenities and are often managed by professional property management companies, providing a higher level of service than traditional private rentals.
Some benefits include:
- Modern Amenities & Services: BTR communities often come with features like gyms, pools, coworking spaces (perfect for remote work), and community events, perfect for a high-end lifestyle. And, regularly exceeding the offerings of a traditional apartment complex.
- Flexibility & Stability: Renters in BTR communities may benefit from long lease terms and more stable rental costs, proving better security and predictability.
However, the premium nature of these properties can also mean higher rents, so renters are forced to weigh the value of amenities against the cost.
As the demand for BTR communities grows, strategic digital campaigns are essential to stand out in the market. In August 2023, we teamed up with a BTR community near Atlanta to help boost leasing and reach their 94% occupancy goal by April 2024. Through dynamic Google and Social Media campaigns, we surpassed expectations. In just six months, they achieved 100% occupancy, over 300,000 impressions, and an impressive 80% average website engagement rate.
For more details, check out our recent Legato Lakes Case Study.
the impact of technology on renting.
Technology continues to revolutionize the rental experience, making it easier for renters to find, lease, and manage their homes. Some of the ways technology is impacting renters include:
- Online Rental Platforms: Websites and apps have streamlined the process of searching for and applying to rental properties, giving renters access to more options.
- Smart Home Features: Many rental properties are equipped with smart home technology, such as keyless entry, smart thermostats, and security systems, enhancing convenience and safety.
- Virtual Tours & Remote Leasing: The pandemic accelerated the acceptance of virtual tours and remote leasing, allowing renters to view and secure properties without needing to be physically present.
These technological advancements offer greater convenience but also require renters to be more tech-savvy and vigilant about online security.
opportunities for renters.
Despite the challenges, there are still many opportunities in today’s market:
- Rent-to-Own Programs: Some developers and owners offer rent-to-own options, allowing renters to build equity in their home over time with an option to purchase the property later. This can be a viable path to homeownership for those who are not able to provide a down payment.
- Exploring Emerging Markets: Renters willing to explore new up-and-coming neighborhoods or smaller cities can often find more affordable rents and a higher quality of life, with the added benefit of potentially seeing property values rise if they choose to purchase in the future.
- Specials & Concessions: In some markets, especially where there is a surplus of rentals, owners and property managers may offer competitive pricing, specials, or additional concessions, such as discounts on rent or waived application fees.
The current state of the real estate industry presents both challenges and opportunities for renters. Rising rental costs, shifting market dynamics, and the impact of technology are all forming a new landscape. By staying informed and being strategic, renters can navigate these changes and find housing that meets their needs and budget. As the market continues to evolve, renters who are adaptable and proactive will be best positioned to thrive in this complex industry.
about the author.
Amanda is the Digital Junior Client Success Manager at Threshold. In her role, she is responsible for relationship management, client advocacy, renewals and upsells, monitoring metrics, strategy development, and documentation and reporting. When she’s not busy managing her clients, you can find her picking out new plants, watching Cowboys football, running her small business, or spending time with her fur baby, Daisy Marie.
