(TND) — More and more landlords are offering concessions to attract tenants, and more apartments are coming onto the market.
Supply and demand in the rental market appear to be better balanced, with more multifamily homes completed in June than any other month in nearly 50 years, according to a new report from Zillow.
A third of property managers now offer discounts – additional services such as free weeks of rent or free parking.
This is an increase of about 25% over the previous year.
The typical rent is currently $2,070, up 3.4% from last year.
According to Zillow, the typical asking rent for a single-family home is $2,294.
The typical asking rent for an apartment building is $1,916.
Since the beginning of the pandemic, rents have risen by around 33 percent nationwide. However, the pace of rent increases has slowed significantly since its peak.
Over a period of about two years that ended early last year, rents rose annually by about 5 to 15 percent each month.
“This slowdown in rent growth is helping the typical renter stay just on the right side of affordability,” wrote Skylar Olsen, chief economist at Zillow, in the report released Monday. “A household with the median renter income would spend 30% of that income on rent. That’s an improvement over 2022, but right on the edge of what’s considered affordable.”
According to Zillow, renters must earn about $82,000 to afford the typical rent.
Wages rose 3.6% last year, slightly exceeding the current annual rent growth rate.
“As with general inflation, most of the pain is probably behind us,” Mark Hamrick, senior economic analyst at Bankrate, said Tuesday. “But that doesn’t mean we’re largely free of the burden of high rental costs.”
Hamrick noted that landlords can only raise rents so much before they price potential tenants out of the market, so increasing concessions is likely one way to ease some of that pain.
“And let us also remember that these concessions can be one-time events,” Hamrick said.
A previous report from Zillow found that the country’s housing deficit is growing.
According to Zillow, the housing shortage has increased to 4.5 million homes in 2022, up from 4.3 million the year before.
According to Zillow, there were about 8.09 million “missing households” this year, which are people, including families, who live with non-relatives.
At the same time, only 3.55 million housing units were available for rent or sale.
According to Zillow, the number of families increased by 1.8 million, but only 1.4 million housing units were built.
According to Zillow, the housing shortage is the root cause of the housing affordability “crisis.”
After the Great Recession, housing construction slowed.
The low point in the new construction sector was reached in 2011, when only around 585,000 apartments were completed that year.
Since then, the number of new homes built has increased slightly each year, but we are still a long way from the 1.6 to 1.9 million homes built annually in the early 2000s.
And the deficit grew as there were fewer than a million completions for seven years in a row.
In recent years, many people have been forced to rent because they could no longer afford to own their own home.
The typical home price has increased by about 4% since last year, 16% in the last three years and 50% in the last five years.
According to the National Association of Realtors, the median sales price for existing homes is currently $426,900.
But mortgage rates have just dropped to their lowest level in over a year, now at 6.47% for a typical 30-year fixed-rate mortgage, so that could entice more renters to enter the buy-to-let market.
While the Zillow report shows a typical U.S. rent of $2,070, there are obviously big differences from city to city.
For example, someone living in Kansas City would need to earn about $60,000 a year to comfortably afford the typical rent.
Someone in Los Angeles would have to earn twice as much to be able to afford the typical rent.
“It is important to remember that these are national totals and the assumption that the dynamics in the real estate and housing market are more local is entirely justified,” said Hamrick.
