Renters’ Renaissance: Higher Vacancies Are Changing the Game

By: Anneken Tappe · September 19, 2023 · Reading Time: 3 minutes

Record Rents But an End in Sight

America’s renters have had to contend with record high prices for apartments and houses. Last month, the median asking rent stood at more than $2,050, just below the record high recorded in 2022. But there may finally be light at the end of the tunnel for renters.

Rental vacancies have ticked up, meaning more competition between landlords and more need to entice renters rather than just going with the highest bidder. In the second quarter of the year, rental vacancy stood at 6.3% in the U.S., up from the multi-decade low of 5.6% a year prior, according to the Census Bureau.

As a result, landlords are starting to use sweeteners again, such as one-time discounts, or rent-free months to appeal to potential tenants, according to real estate company RedFin (RDFN).

Renter’s Market on the Horizon?

Here’s why things may be looking up for renters: In the second quarter of the year, there was a near 29% year-over-year surge in completed residential buildings with five or more units. In other words, many more apartments to rent. And with more vacant homes ready for occupancy, the urgency to fill them up rises, too.

That said, it’s not a uniform picture nationwide. Across the South and West of the U.S., which witnessed high demand and people moved into the so-called Sunbelt region, rents have been falling following the pandemic-era boom. In the Midwest and Northeast, on the other hand, rents are rising.

Structural Problems

While rising housing supply and falling rents would be good news for many Americans, the U.S. housing market continues to operate in a deficit. That means there just aren’t enough housing units, especially the affordable kind.

Estimates for how many housing units America is short vary, but they’re in the millions. It will take a long time to chip away at this structural deficit.

Read more reporting here.

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