Every seasoned investor knows that staying on top of industry trends is the best way to make smarter investments and get more profit from your properties.
We’ve gathered thousands of responses from owners across the country, along with renters and property managers, to bring you the most important rental property trends to be aware of in 2023.
Renter demographics are constantly in flux. Heading into 2023, there will be fewer one-person households and single-parent family renters, according to Buildium’s 2023 Industry Report. Meanwhile, landlords can expect an uptick in renters who are couples with kids, as well as multi-generational households.
This increase is tied to the economic pressures brought on by the pandemic and recession, but the implications for landlords are multifaceted. For example, with an increase in multi-generational households, properties with accessibility features will be more sought after.
Millennial renters are another demographic that’s on the rise. These renters will likely be looking for more space to expand their families in the coming years. The savvy landlord will consider ways to accommodate these changing renter priorities in their properties.
A sweeping rental property trend to watch is the slow and steady shift from urban areas to the suburbs. The mass urban exodus has been rising exponentially since 2020 and is fueled by increased remote work opportunities. With more individuals now working from home, the market has seen a 12-percentage-point shift away from urban neighborhoods. Over two-thirds (68%) of Buildium’s survey respondents now reside in suburban and rural areas.
In fact, since 2020, 1.2 million Americans have left the metropolis for a small or mid-sized city, suburban area, or rural neighborhood. Luckily for property owners, not everyone fleeing the city is ready to buy property. Plus, the rental market in small towns and suburban areas is often more affordable for new landlords to start their real estate investment journey.
Financial trends are perhaps the most important ones to keep in mind. The fact is that the general level of income in the U.S. has increased over the past couple of decades. But, while incomes are increasing, inflation often waters down some of the benefits these rising wages bring. This means that the rental market will remain highly competitive.
One issue on every investor’s mind is the housing affordability crisis. The trend is especially prevalent in the rental market. Rent affordability–in both urban and rural areas–has worsened as 24% of families spend more than half their income on rent. Finding, and keeping, an affordable rental unit has never been more difficult.
Property owners must have an understanding of how inflation, increased wages, and the cost of living are evolving in their local area. The entire industry, not just renters, is in a vulnerable position when affordable housing becomes difficult to find. Owners need to ask how they can keep investments profitable without raising the rent unreasonably. For some, now simply is not the right time to invest in a new rental property. One of the many advantages of working with a property manager means you’re partnered with an expert who can help find ways to both keep rent affordable for tenants while not cutting into profits.
Another trend to be aware of as we come to the end of the COVID-19 pandemic is that employment is back on the rise. For rental property owners, this translates into lower moving rates, as families and couples are content to stay put in their homes. If you can find great tenants, chances are you’ll get to keep them for a good few years.
Facing economic pressures, one surefire way to protect your profits is ensuring that you’re offering the kind of services and amenities renters expect and will pay for. The most prominent change in renter expectations to keep in mind is technology. Since 2021, the number of renters who say they’d prefer to pay their rent electronically has grown by an enormous 26 percentage points.
The landlords who drag their feet on implementing user-friendly rental technology will be left behind if they don’t adapt to the changing landscape. Here are some of the top technology-focused services that can set you apart in the minds of renters:
It’s a lot of work to keep up with fluctuating renter expectations, but in 2023, doing so is a necessity. One low-stress, high-ROI way landlords can succeed in staying ahead of property trends is by partnering with a skilled property manager. The right property manager knows how the market is changing and exactly what renters in your location want.
Their benefit doesn’t end there. Rental owners working with property managers report less stress in three key areas: handling administrative paperwork, finding high-quality renters, and successfully marketing their property in a competitive market.
To find the right fit, you don’t have to look far. If you’re ready to finally ease your management burden, find a quality property manager in your area.