Renters Offered More Concessions as Market Stabilizes
- Renters are seeing more concessions now than they have in more than two years, with 30% of listings offering at least one concession.
- Forty-three of the 50 largest markets in the U.S. have more rental concessions now than last year.
- Concessions are often rising most in markets where multi-family construction is booming.
Renters are continuing to get sweet deals across the U.S. this fall, with far more Zillow rental listings featuring some sort of concession compared to last year.
Now, 30% of rentals on Zillow offer at least one concession – such as free months of rent or parking – to attract new tenants, compared to 24% at this time last year. They’re one way to entice new tenants to a property without lowering rent.
Zillow’s rental market report shows 3.2% year-over-year rent price growth in October, much closer to normal 3-5% annual growth than the peak of 16.9% in February 2022. Though October was the first month since that peak where annual rent growth accelerated, it remains to be seen whether this is the beginning of a recovery in annual rent growth back toward longer-term averages, or more of a stabilization. More rentals offering concessions may be a signal that rent growth is set to level off.
Where are apartment hunters getting the most sweeteners
Rental concessions are more common than a year ago in 43 of the 50 biggest U.S. metro areas. Salt Lake City (54%), San Jose (51%) and Washington, D.C. (50%) all had half of the listings on Zillow in their markets offering at least one concession, followed by Charlotte (48%) and Minneapolis (47%).
Those where renters will find the fewest concessions are New Orleans (9%), Providence (14%), Miami (14%) and New York (15%).
Markets where concessions have risen the most since last year — meaning the market is now friendlier for renters — are Salt Lake City, where the share of listings featuring a concessions rose a whopping 26 percentage points, followed by Charlotte (+21 percentage points), Columbus (+18), Dallas (+17) and Atlanta (+15).
Renters are less likely than they were a year ago to find a rental listing on Zillow offering a deal in only a handful of markets. Richmond leads the way, where the share of listings offering a concession dropped by five percentage points from last year, then Louisville (-4 percentage points), Providence (-4), Sacramento (-2), Washington, D.C. (-1) and Hartford (-1).
Construction boom
The nationwide rental vacancy rate climbed to 6.6% in the latest reading from the U.S. Census Bureau, which is the same as the first quarter of 2020 when the pandemic hit. A higher vacancy rate means more options for renters in the market for a new place, and more reason for landlords to offer concessions to entice renters to look at their listing. One reason the vacancy rate may have risen is the huge number of new multi-family units that have hit the market in recent months.
Markets experiencing a construction boom are more likely to have seen an upswing in concessions. According to Fannie Mae’s Mid-2023 Multifamily Construction Update, markets such as Washington D.C, Dallas, and Austin are seeing more new developments, with Dallas and Austin having 74,000 and 66,000 new units either recently completed or underway, respectively.
Zillow’s data reveals a similar rise in concessions in those metros and others, including Phoenix and Atlanta, which are also among the top markets for new multifamily construction. This correlation highlights how the influx of new apartments is compelling housing providers to offer incentives to attract renters.