Renters are currently holding more power in their relationships with landlords as the balance of power shifts. Landlords are finding themselves in a position where they need to offer incentives such as free parking and rent-free weeks to attract tenants to their units. The share of rental listings on Zillow offering concessions has climbed to 33.2% in July, up from 25.4% a year ago. This trend is especially prevalent in major metro areas like Raleigh, Charlotte, Atlanta, Salt Lake City, Nashville, and Austin where more than half of rental listings are offering sweeteners. The increase in concessions has been significant in some areas, such as Charlotte, where the share of units offering incentives has increased by nearly 16 percentage points.
Natalie Garcia, a 23-year-old graduate student in Arizona, found a deal easily when looking for a place to live with her boyfriend. They were able to secure half off the first month’s rent at a one-bedroom apartment in Scottsdale. Another renter, Rylee Dunham, received a free month of rent after offering to fix a broken fence at a two-bedroom apartment in Gilbert, Arizona. Despite these concessions, the cost of housing remains a concern in the economy, with shelter accounting for nearly 90% of the monthly increase in consumer prices in July. Shelter prices have also risen by 5.1% from last year, although this is a decrease from previous trends.
The cost of rent is still increasing, with apartment rents rising by 5.1% over the past two years. However, this is consistent with historical trends and shows improvement from the 22.3% increase seen in the previous two years. The shift in power towards renters is partly due to a building boom for apartments, with nearly 60,000 multifamily units completed in the United States in June, the largest increase in supply since 1973. This increased supply has made it challenging for landlords to fill some units, leading to a rental vacancy rate of 6.6%, the highest since the winter of 2021.
The Zillow economist, Orphe Divounguy, believes that falling mortgage rates could also benefit tenants by encouraging some potential renters to consider buying a home rather than renting. He advises renters to be proactive, informed, and aware of their leverage in negotiating with landlords to make the most of the perks being offered. The current trends in the rental market show that renters have more bargaining power and are able to take advantage of the incentives and concessions being offered by landlords in order to secure favorable rental agreements. As the balance of power continues to shift, renters may find themselves in an increasingly advantageous position when it comes to finding and securing rental housing.
