Landlords and renters alike are saying rental affordability is impacting their future plans, according to a new Realtor.com Avail Landlord & Renter Survey. While the survey found that fewer independent landlords are planning to raise rents in 2024, more tenants are paying persistently higher rents in recent years pushing their home purchase plans back further.
Six in 10 landlords (60%) plan to raise rent in the next 12 months, down from 65% in the first quarter of 2023. According to the survey, many landlords (69%) note rent increases vary for renewals versus new leases, most opting for 0% to 5% increases for renewals and 0% to 10% increases for new leases. Of those who don’t raise rents differently for renewal versus new tenants, 50% plan to increase rent between 0% and 5%.
These rent increases align with higher costs Americans are feeling across the board, including landlords who are passing those costs on to their tenants. Most landlords (60%) state that their ownership costs increased upward of 10% in the past 12 months. Among those not planning to raise rents this year, 72% say their unit is already priced at or above local market value.
“The once-hot rental market has been stabilizing and softening year over year since May 2023, mostly from a surge in new rental options coming to the market that gave renters more to choose from. But the surge in rents and the sheer number of renters, many of whom have held off on buying in recent years, continue to minimize any potential price impacts that increased rental inventory could have on the market,” says Danielle Hale, chief economist, Realtor.com.
The survey found that the average renter pays between $1,000 and $1,500 monthly, but more renters are paying rents upward of $1,000 to $2,000 than in previous surveys. When renewing their most recent lease, 71% of surveyed renters noted a rent increase.
“The median asking rent in 2024 is expected to drop only slightly below its 2023 level (-0.2%), but with wages rising 4.5% in January and anticipated to continue growing, even the modest decline in rent is giving households a real break, reducing the share of each paycheck going toward rent,” Hale says.
Feeling the strain of high housing costs, 35% of surveyed renters anticipate future rent increases and 38% are unsure if they will see one, which is leading nearly two-thirds (63%) to explore other housing options. Other common reasons for those not renewing leases include that the current rent is too expensive (43%) and unaffordable rent increases (23%).
The percentage of renters attempting to negotiate rent increases when renewing their lease increased from 28% in the first quarter of 2023 to 34% in the fourth quarter. This may be especially true in 2024 as higher rental vacancy rates may mean landlords are more interested in securing renewals, Realtor.com notes.
Due to rising interest rates and inflation, 82% of surveyed renters say that the economy has had an impact on their housing plans. Of the share of renters who are not considering a home purchase this year (71%), the majority cited not having enough for a down payment (61%) and that interest rates are too high (42%).
The portion of renters considering purchasing a home in the next 12 months decreased slightly from 30% in the first quarter of 2023 to 29% in the fourth quarter, with concerns about a lack of savings and their ability to qualify for a mortgage increasing. This correlates with the 68% of renters reporting saving less each month than they were 12 months ago.
The higher mortgage rates and home prices are also impacting landlords’ ability to invest in more properties in the year ahead. Just 22% of landlords plan to buy one or more rental properties in the next 12 months, and 7 in 10 already have a mortgage on at least one rental property. Although the strain of high costs is burdensome, 73% of landlords have no plan to sell any units in their portfolio over the next 12 months, the survey found.
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