• 33.9% of rental listings on Zillow mentioned at least one kind of concession in October, up from 20.2% in March but in line with the prior two months.
• Almost half of Gen Z renters that moved recently said they were motivated to do so because their new rental offered promotions or concessions.
• Free/reduced rent was by far the most common concession offered by landlords.

After jumping from 20% to more than 30% in the six months between March and August, the share of rental listings on Zillow offering concessions (including free parking, reduced fees and/or free months of rent) appears to have stabilized around a third in recent months.

And the concessions appear to be working at convincing younger renters in particular to move into a place of their own — almost half (49%) of Gen Z renters that moved recently said they were motivated to do so because their new rental offered promotions or concessions, according to a Zillow survey.

In January, just 16% of rental listings advertised some form of concession. But that figure began growing quickly as the coronavirus pandemic hit in early spring and spread through the summer, rising to 20.2% in March and to 32.2% by August, according to a Zillow analysis of rental listings. The spike in landlords offering concessions — incentives used to attract new tenants and/or retain existing residents  — coincided with a dramatic slowdown in annual rent growth over the same period, from 3.9% in March to 0.9% in August. 

Signs of Stabilization?

But that swift spike stabilized at about a third of all rental listings in recent months, rising more slowly to 33.5% in September and 33.9% in October. Concessions were offered more than half the time in October in three of the 50 largest markets analyzed — Washington, D.C. (62.4%), Charlotte (53.6%) and San Jose (52.1%). Large markets with the lowest share of listings offering concessions in October included Oklahoma City (12.5%), New York (12.6%) and Buffalo (13.1%).

The rental market has suffered badly in the face of the coronavirus, even as the for-sale market has remained red hot, with renters bearing the brunt of ongoing economic disruptions and many reconsidering their housing options in light of telecommuting flexibility and/or a need for more space. The slowing growth of concessions may indicate that the monthslong freefall in rental growth — especially in pricier markets including New York, San Francisco and San Jose, where rent itself has outright fallen in recent months — is also leveling off and beginning to turn a corner.

Some early pandemic behaviors — including a flood of young adults moving back home — may also be reversing, which could also help stabilize the rental market in coming months. More than a third (34%) of Gen Z renters who moved in the past year said they moved from the home of a family member or friend, up from 20% who reported the same in an April survey.  This data is consistent with previous Zillow research that found the number of young adults living with parents or grandparents was beginning to fall in September, after rising dramatically in the spring. 

Among renters who moved from a previous rental within the past year, a majority said they aren’t saving money. More than half (51%) report paying more than before and 14% report paying the same. A majority (57%) of Gen Z renters said they were motivated to move because they found a better deal on rent, suggesting they’re trading up.

Reduced Rent, Big Savings

Of the six distinct types of rental concessions tracked (free/discounted rent, waived/reduced broker, application and/or deposit fees, gift cards and parking), free or discounted months’ rent was by far the most common in October, noted in 89.1% of listings nationwide that mentioned a concession. Almost 10% of listings with a concession offered a waived or reduced deposit, followed by 7.2% offering a gift card in some amount, 4.7% offering free or discounted parking, 2.2% offering to waive or reduce the application fee and a scant 0.1% offering to cover some or all of any brokers’ fees charged.

Some offer of free or reduced months’ rent was mentioned most often in 47 of the 50 largest markets nationwide analyzed by Zillow, with Buffalo, Detroit and Oklahoma City as the only exceptions. In Detroit, offers of a waived or reduced deposit were most common, appearing in 75.4% of all listings offering a concession of some kind. In both Buffalo and OKC, waived or reduced application fees were the most common concession offered, appearing in about two-thirds of listings in both markets (66.7% and 65.3%, respectively). In all three of these markets, free/reduced rent was the second-most common concession offered, appearing in about a third of rental listings in each area.Concessions often add up to big savings for renters — concessions offered in six large markets (Boston, Chicago, Indianapolis, New York, Philadelphia and Washington, D.C.) amounted to savings equal to two months free rent, assuming a year-long lease (16.7%, or 1/6 off total rent). Nationwide, the effective savings rate in September was 11.5% — equivalent to six weeks free rent (again, assuming a year-long lease). In all 50 of the largest markets, the minimum median savings rate was 8.3% or higher.

Methodology

Zillow Group Population Science collected a nationally representative sample of more than 1,000 homeowners (household decision makers that own their home and did not move in the past year). From September 29th to October 5th, 2020, the survey asked homeowners questions about their plans to sell and recent life events. Among those who did not have their home listed for sale (99% of the sample), the survey also asked why they were not currently selling.

To achieve national representativeness, quotas for age, ethnicity/race, education, income, region, relationship status, and sex limited oversampling of any given demographic group. In addition to quotas, ZG Population Science used statistical ranking to weight the sample to the US Census Bureau American Community Survey 2018 sample of homeowners. Weighting used the same variables as the quotas. Margins of error are at a 95% confidence interval.