{"id":163047,"date":"2023-12-04T18:19:35","date_gmt":"2023-12-05T01:19:35","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=163047"},"modified":"2023-12-05T09:34:41","modified_gmt":"2023-12-05T16:34:41","slug":"2024-rental-market-forecast","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/2024-rental-market-forecast","title":{"rendered":"2024 Rental Market Outlook: Is a Shift Coming Next Year?"},"content":{"rendered":"\n<p><span data-preserver-spaces=\"true\">The real estate market (as well as about every other part of the economy) has been quite difficult to gauge since COVID-19 arrived in April 2020, to say the absolute least. The stock market collapsed and then had a V-shaped recovery before sliding back and then climbing again.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Real estate prices shot up faster than at any time in history during the second half of 2020 until the early parts of 2022. Then, after interest rates were increased faster than they had been at any time in this century, real estate prices stalled and flatlined.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Home prices have been on a roller coaster, to say the least. And rent prices have been no different.&nbsp;<\/span><\/p>\n\n\n\n\n\n\n  <div class=\"lg:block\" x-data=\"{ ad_block_block_656e7943ede1f: popAds(1) }\">\n      <template x-for=\"ad in ad_block_block_656e7943ede1f\">\n        <a\n          :href=\"ad.linkURL\"\n          class=\"no-underline text-black\"\n          x-on:click=\"adClicked('https:\/\/www.biggerpockets.com\/blog\/2024-rental-market-forecast', ad.sponsor, ad.title, ad.id, 'blockAdClicked', 'blockAd', '')\"\n          target=\"_blank\">\n          <div\n            class=\"py-4 border-b flex flex-col flex-nowrap text-sm border-t px-0 rounded-none\"\n            x-init=\"\n              analytics.track('blockAdLoaded', {\n                referrer: 'https:\/\/www.biggerpockets.com\/blog\/2024-rental-market-forecast',\n                sponsor: ad.sponsor,\n                ad_title: ad.title,\n                ad_page_location: ''\n              })\n            \"\n            x-intersect:enter.once=\"adViewed('https:\/\/www.biggerpockets.com\/blog\/2024-rental-market-forecast', ad.sponsor, ad.title, ad.id, 'blockAdViewed', 'blockAd', '')\">\n            <div><span class=\"text-xs text-slate-light block bg-slate-50 p-1 inline-block rounded-md\">Sponsored<\/span><\/div>\n            <div class=\"flex items-center text-sm space-x-4\">\n                <img :src=\"ad.imageURL\" :alt=\"ad.imageAlt\" class=\"h-10 w-10 object-cover rounded-full\">\n\n                <div clas=\"text-sm\">\n                    <span class=\"font-bold block\" x-text=\"ad.sponsor\"><\/span>\n                    <span class=\"text-slate\/80\" x-text=\"ad.description\"><\/span>\n                <\/div>\n            <\/div>\n\n            <div>\n                <span class=\"font-bold\" x-text=\"ad.title\"><\/span>\n                <p class=\"mt-2 text-slate\/80\" x-text=\"ad.body\"><\/p>\n                <span class=\"mt-2 text-themeBlue block mt-2 underline\" x-text=\"ad.linkTitle\"><\/span>\n            <\/div>\n          <\/div>\n        <\/a>\n      <\/template>\n  <\/div>\n\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Where Rents Have Been the Past Few Years<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">At the beginning of 2021, rents began to skyrocket in&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.apartmentlist.com\/research\/national-rent-data\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">an unprecedented way<\/span><\/a><span data-preserver-spaces=\"true\">. In large part, this was due to a lack of supply from&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.freddiemac.com\/research\/insight\/20210507-housing-supply\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">an already undersupplied housing market<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;that was then further crippled by the delays in new construction brought on by the pandemic.<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"776\" height=\"518\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/image2-3.jpeg\" alt=\"Month-Over-Month Change in National Rent Index (2018-2023) \u2013\u00a0Apartment List\" class=\"wp-image-162774\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/image2-3.jpeg 776w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/image2-3-300x200.jpeg 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/image2-3-768x513.jpeg 768w\" sizes=\"auto, (max-width: 776px) 100vw, 776px\" \/><figcaption class=\"wp-element-caption\"><em>Month-Over-Month Change in National Rent Index (2018-2023) \u2013&nbsp;<a href=\"https:\/\/www.apartmentlist.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">Apartment List<\/a><\/em><\/figcaption><\/figure>\n\n\n\n<p><span data-preserver-spaces=\"true\">Rents increased&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/dwellsy.com\/blog\/relentless-rent-rise-continues\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">an enormous 16%<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;year over year in 2021 and continued to grow in 2022 before finally slowing and reversing course in 2023.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Part of the decline had to do with an increased turnout in new construction. As RealPage&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.realpage.com\/analytics\/apartment-forecast-3rd-quarter-2023\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">notes<\/span><\/a><span data-preserver-spaces=\"true\">, \u201cnew supply appears to be the strongest deterrent of rent growth.\u201d<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Another factor was that we had simply reached the limits of&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/on-the-market-145\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">affordability<\/span><\/a><span data-preserver-spaces=\"true\">, especially with the high inflation suffered throughout 2022. This means more young people (<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.ktvq.com\/nearly-half-of-young-adults-are-still-living-with-their-parents\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">nearly half of those aged 18 to 29<\/span><\/a><span data-preserver-spaces=\"true\">) are living with their parents. This trend may very well be pushing young couples to live together earlier than they otherwise would have. (<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.dailymail.co.uk\/news\/article-11868243\/Rent-forcing-couples-shack-record-levels-11-aged-18-24-live-partner.html\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">A surprising 11%<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;of couples aged just 18-24 now live together.)&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.washingtonpost.com\/business\/2018\/11\/12\/million-americans-live-rvs-meet-modern-nomads\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Over 1 million Americans live in RVs<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;(and RV ownership&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.progressive.com\/resources\/insights\/living-in-an-rv\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">has increased 62%<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;in the last 20 years).&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">And we\u2019ve also seen the popularity of sites like&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.spareroom.com\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">SpareRoom.com<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;and&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/sharinghousing.com\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">SharingHousing.com<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;grow significantly. These sites allow people to rent out just a room instead of an entire house or apartment.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Thus, as any economics textbook will teach you, people respond to incentives. Prices have become unaffordable, particularly in large coastal cities, so tenants and prospective tenants have responded by downsizing, moving in with parents, friends, or romantic partners, and using a host of other ways to make things work. This trend, along with a wave of newly built properties easing things on the supply side, has caused rents to come down modestly in 2023.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Indeed, as real estate prices have stalled, by March 2023,&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/calculatedrisk.substack.com\/p\/inflation-adjusted-house-prices-46\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">the price-to-rent ratio has fallen 7.9%<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;year over year.<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"512\" height=\"358\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/12\/RTP-2024-outlook.png\" alt=\"Price-to-Rent: Case-Shiller Housing Price Index (1983-2024) - Calculated Risk Blog\" class=\"wp-image-163053\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/12\/RTP-2024-outlook.png 512w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/12\/RTP-2024-outlook-300x210.png 300w\" sizes=\"auto, (max-width: 512px) 100vw, 512px\" \/><figcaption class=\"wp-element-caption\"><em>Price-to-Rent: Case-Shiller Housing Price Index (1983-2024) &#8211; <a class=\"editor-rtfLink\" href=\"https:\/\/calculatedrisk.substack.com\/p\/inflation-adjusted-house-prices-46\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Calculated Risk Blog<\/span><\/a><\/em><\/figcaption><\/figure>\n\n\n\n<p><span data-preserver-spaces=\"true\">As of October 2023, according to Realtor.com, national rents&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.realtor.com\/research\/october-2023-rent\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">had declined 0.5% year over year<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;for 0-2-bedroom properties. But remember, inflation is still close to 4%, so in real terms, rent has declined almost 5%.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Where Will Rents Go in 2024?<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">While single-family housing construction has fallen off, in July, there were&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/calculatedrisk.substack.com\/p\/july-housing-starts-record-number\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">actually more multifamily housing units being built<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;than at any time previously. That\u2019s incredible to hear, given how high interest rates are right now, but it does mean that new&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/finding-multifamily-properties\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">multifamily<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;inventory will alleviate some supply issues in the rental market.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">RealPage believes this means \u201crents will face considerable downward pressure despite otherwise steady demand.\u201d Still, the website expects occupancy rates to stay \u201cconsistent with historical norms, that is, the U.S. figure in the lower 94% range\u201d in 2024.<\/span><\/p>\n\n\n\n<p><a class=\"editor-rtfLink\" href=\"https:\/\/apnews.com\/article\/inflation-economy-interest-rates-federal-reserve-powell-2200b5e3da872a349550ea707d4d6d42\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Inflation is also down<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;while wages are up, but Americans are also spending less, and many live in economically precarious situations.&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/deutsche-bank-says-recession-is-100-percent-likely\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">The fear of a global recession still exists<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;despite increasing hope of a soft landing.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">If inflation continues to fall and the economy stays stable, more people will likely start looking to rent on their own again, and the various adjustments to save on rent will become less common. This would put some upward pressure on rent\u2014especially since, with high interest rates, buying is now 52% more expensive than renting nationwide, and thus, more people are looking to rent than buy.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">That being said, RealPage also points out that \u201cthe resumption of federal student loan repayments could be something that erodes the share of wallet that American households are allocating towards debt repayment,\u201d which could force many Americans to retrench similarly as they did in 2023.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Overall, RealPage agrees with Globe St.\u2019s&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.globest.com\/2023\/11\/27\/rental-housings-key-trends-heading-into-2024\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">analysis, which concludes<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;that \u201cIn 2024, economists largely expect the rental market to continue softening.\u201d<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Final Thoughts<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">My analysis is similar. While economic predictions should always be taken with a grain of salt, it would appear very unlikely that rents would rise substantially in the coming year. Rents have already risen enormously and pressed Americans to the limit of affordability throughout the country. Many new units are about to become available, and economic uncertainty, along with the resumption of student loan repayments, will keep Americans cautious.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">While the recent reduction in inflation and solid growth hopefully means the American economy is strengthening, there is still much to be concerned about. If the economy stays solid, we could see a small amount of growth in rental prices, at least in particular submarkets.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">But I suspect rents will be flat or likely even decline slightly throughout 2024 before starting to grow steadily again in 2025. Either way, I certainly wouldn\u2019t make any big bets on rent prices increasing substantially anytime soon.&nbsp;<\/span><\/p>\n\n\n\n<div class=\"wp-block-group has-slate-200-background-color has-background\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<h2 class=\"wp-block-heading has-text-align-center has-theme-slate-dark-color has-text-color\">More from BiggerPockets: 2024 State of Real Estate Investing Report<\/h2>\n\n\n\n<div class=\"wp-block-media-text has-media-on-the-right is-stacked-on-mobile is-vertically-aligned-top\" style=\"grid-template-columns:auto 43%\"><div class=\"wp-block-media-text__content\">\n<p class=\"has-theme-slate-dark-color has-text-color\">After more than a decade of clearly favorable investing conditions, market dynamics have shifted. Conditions for investment are now more nuanced, and more uncertain. Download the 2024 State of Real Estate Investing report written by Dave Meyer, to <strong>find out which strategies and tactics are best suited to win in 2024.<\/strong>&nbsp;<\/p>\n\n\n\n<div x-data=\"frictionlessSignupForm()\" class=\"button-account-type alignleft\">\n\n  \n\n  <!-- Guest Button -->\n      <template x-if=\"!$store.wp.isMember()\">              <button x-on:click=\"$store.wp.displaySignupPrompt()\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\">Sign up to download<\/button>\n          <\/template>  \n  <!-- Free Member Button -->\n      <template x-if=\"$store.wp.isMember() &#038;&#038; !$store.wp.isPaidMember()\">              <a href=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/BP_State-of-REI_2024-final.pdf\" target=\"_blank\" x-on:click=\"window.analytics.track(&#039;Blog | Carrot Download | SOREI 2024&#039;, {\n            referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/2024-rental-market-forecast&#039;,\n            account_type: &#039;free&#039;,\n          });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\">Download<\/a>\n          <\/template>  \n  <!-- Pro Member Button -->\n      <template x-if=\"$store.wp.isPaidMember()\">      <a href=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/12\/BP_State-of-REI_2024-final_Updated-Dec-5.pdf\" target=\"_blank\" x-on:click=\"window.analytics.track(&#039;Blog | Carrot Download | SOREI 2024&#039;, {\n          referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/2024-rental-market-forecast&#039;,\n          account_type: &#039;pro&#039;,\n        });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\">Download<\/a>\n    <\/template>  \n  <!-- Frictionless Popup -->\n  <\/div>\n<\/div><figure class=\"wp-block-media-text__media\"><img loading=\"lazy\" decoding=\"async\" width=\"680\" height=\"600\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/MiniAnnouncement.png\" alt=\"\" class=\"wp-image-162917 size-full\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/MiniAnnouncement.png 680w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/MiniAnnouncement-300x265.png 300w\" sizes=\"auto, (max-width: 680px) 100vw, 680px\" \/><\/figure><\/div>\n<\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The rental market came back to Earth this year, with growth decelerating and prices contracting in many markets. What will happen in 2024?<\/p>\n","protected":false},"author":1689,"featured_media":163052,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7382],"tags":[],"class_list":["post-163047","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-rental-prices"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/163047","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/1689"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=163047"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/163047\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/163052"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=163047"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=163047"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=163047"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}