Despite strong demand, rental concessions, such as free months of rent or parking, are at their highest level in over two years, according to new data from Zillow.
In October, about 30% of Zillow’s rental listings advertised concessions. According to Zillow, concessions reached a peak in February 2021, a time when renter demand was lower during the pandemic, with 36.7% of rentals offering them. Rental concessions then dropped as far as 19.4% in July 2022.
“The pandemic era’s increase in concessions was a direct response to decreased renter demand. Currently, we’re witnessing a different scenario where the demand for rental housing is high, but there’s been a notable rise in supply,” said Anushna Prakash, an economic research data scientist at Zillow. “To differentiate themselves from newer, potentially more amenity-rich apartment buildings, property managers are stepping up their game, offering more incentives to attract potential renters with a broader range of choice.”
Zillow data has found that 43 of the nation’s 50 largest metros have seen a rise in concessions compared with 2022. Salt Lake City and San Jose, California, topped the list for incentives, with more than half the rentals listed on Zillow in October advertising concessions. According to Zillow, the trend also is more pronounced in metros with construction booms, such as Washington, D.C.; Austin, Texas; and Dallas.
However, it’s a varied landscape nationwide, with property managers exploring different strategies as they navigate the effectiveness of concessions before adjusting rents. On the opposite end of the spectrum, New Orleans is at the bottom of the list with only 9% of rentals listed on Zillow in October advertising concessions, followed by Providence, Rhode Island, and Miami at 14%, and New York at 15%.