2022 is so last year — but a few rental housing trends in 2022 are well worth noting for this year.
The top rental housing trends of 2022 were:
- slowing rental price growth;
- an increasing number of units available to rent; and
- declining tenant interest to form new households, according to Apartment List.
In the first six months of 2022, the national rental price growth increased by 5.5%, but began falling back monthly in August 2022. Rent growth in 2023 will likely decelerate, flatten, and then decline in 2024.
Further, the rate of unit availability has increased with California’s vacancy rate
Today’s rising vacancy rate trend will force landlords to lower asking rents to attract tenants. When rents decrease, the property’s vacancy rate recovers. Higher rents will gradually return as vacancies decline.
Additionally, though many Gen Z’s took a leap of faith in 2021 to rent a two-bedroom apartment with five roommate’s — for the sake of independence from family — the same did not occur in 2022.
In 2022, tenants grew hesitant to enter into new household formations due to a housing market of increasing rental rates when wages have not kept up with consumer inflation.
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California real estate: 2022 in review and a forecast for 2023
The cool down is certain to continue
The initial surge fueling real estate activity in early 2022 has lost its energy — so what now in 2023?
For one, housing construction is starting to pick up again. With multi-family housing construction in Los Angeles and builders converting commercial property into rental property, there will be more available housing units in 2023.
For another, rental demand has cooled as tenants are getting comfortable with the wait-and-see approach. The concern about the coming recession and still-high rents keep tenants from moving out on their own.
Also, members of Gen Z may have taken a brief step back from embarking into the world of rent-so-high-it-makes-them-cry, but it doesn’t mean they never will. In 2022, Gen Z indicated they’re thinking of investing in property and becoming buy-to-let investors, using monies saved by renting grouped with others.
The door is open for real estate agents to look into expanding their services in the current recession. A cool down in housing demand is an opportunity for real estate professionals to try their hand at becoming a property manager or other recession-proof services such as exchanging properties, handling foreclosure resales and private money lending.
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