{"id":179071,"date":"2024-11-18T16:17:36","date_gmt":"2024-11-18T23:17:36","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=179071"},"modified":"2024-11-18T16:22:01","modified_gmt":"2024-11-18T23:22:01","slug":"rental-market-report-nov-2024","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/rental-market-report-nov-2024","title":{"rendered":"A Resilient Rental Market Shows Positive Signs For Next Year"},"content":{"rendered":"\n<p><span data-preserver-spaces=\"true\">The newest <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.zillow.com\/research\/october-2024-rent-report-34569\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Zillow Rental Market Report<\/span><\/a><span data-preserver-spaces=\"true\"> is out, and it\u2019s showing \u2018\u2018a softening of the rental market beyond regular seasonality.\u2019\u2019 <\/span><span data-preserver-spaces=\"true\">Apparently,<\/span><span data-preserver-spaces=\"true\"> rental demand dipped double below what\u2019s typical for this time of year this October.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">But is this alarming? Let\u2019s take a closer look at what\u2019s happening to the r<\/span><span data-preserver-spaces=\"true\">ental market because there\u2019s <\/span><span data-preserver-spaces=\"true\">actually<\/span><span data-preserver-spaces=\"true\"> some <\/span><span data-preserver-spaces=\"true\">serious<\/span><span data-preserver-spaces=\"true\"> potential going into next year<\/span><span data-preserver-spaces=\"true\">.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">The Rental Market Came In Slower Than Usual But Still Growing<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">First <\/span><span data-preserver-spaces=\"true\">of all<\/span><span data-preserver-spaces=\"true\">, rental growth only <\/span><em><span data-preserver-spaces=\"true\">slowed <\/span><span data-preserver-spaces=\"true\">down<\/span><\/em><span data-preserver-spaces=\"true\"> in October, and rents are not falling.<\/span> <span data-preserver-spaces=\"true\">Significantly, the report clearly states that <\/span><span data-preserver-spaces=\"true\">nationwide,<\/span><span data-preserver-spaces=\"true\"> \u201crents remained stable,\u201d with an annual growth of 3.3%.<\/span><span data-preserver-spaces=\"true\"> It\u2019s not spectacular growth, but if you zoom in on regional <\/span><span data-preserver-spaces=\"true\">growth<\/span><span data-preserver-spaces=\"true\"> in several metro areas, things <\/span><span data-preserver-spaces=\"true\">are looking<\/span><span data-preserver-spaces=\"true\"> substantially better.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">In fact, rents increased in 48 out of the 50 largest metro areas covered by the report. Some recorded robust gains, notably Hartford (+7.2%), Cleveland (+7%), Louisville (+6.4%), Providence (+5.8%), and Cincinnati (+5.7%).<\/span><\/p>\n\n\n<p><iframe title=\"How Rents Have Changed Since Last Year\" aria-label=\"Map\" id=\"datawrapper-chart-mxify\" src=\"https:\/\/datawrapper.dwcdn.net\/mxify\/4\/\" scrolling=\"no\" frameborder=\"0\" style=\"width: 0; min-width: 100% !important; border: none;\" height=\"485\" data-external=\"1\"><\/iframe><script type=\"text\/javascript\">!function(){\"use strict\";window.addEventListener(\"message\",(function(a){if(void 0!==a.data[\"datawrapper-height\"]){var e=document.querySelectorAll(\"iframe\");for(var t in a.data[\"datawrapper-height\"])for(var r=0;r<e.length;r++)if(e[r].contentWindow===a.source){var i=a.data[\"datawrapper-height\"][t]+\"px\";e[r].style.height=i}}}))}();\n<\/script><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The losses in metro areas that did report falling rents weren\u2019t all that dramatic. And let\u2019s remember that these are month-by-month losses, not yearly losses. On a month-by-month basis, rents fell most substantially in Austin (-1%), Boston (-0.7%), San Antonio (-0.6%), Seattle (-0.6%), and Denver (-0.5%).<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">These aren\u2019t <\/span><span data-preserver-spaces=\"true\">huge<\/span><span data-preserver-spaces=\"true\"> declines in rent. Investors in the Austin area will not be surprised by the trend. Austin\u2019s build-to-rent boom began during the pandemic, with <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.kut.org\/housing\/2024-09-10\/as-rents-across-the-country-go-up-austin-prices-continue-to-fall\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">51,000 building permits issued in 2021<\/span><\/a><span data-preserver-spaces=\"true\"> alone. <\/span><span data-preserver-spaces=\"true\">The thing with building new homes is that it takes time, and when a market\u2019s expansion is <\/span><span data-preserver-spaces=\"true\">largely<\/span><span data-preserver-spaces=\"true\"> due to a short-lived population boom, well, developers sometimes <\/span><span data-preserver-spaces=\"true\">just<\/span><span data-preserver-spaces=\"true\"> miss the boat with demand.<\/span> <span data-preserver-spaces=\"true\">This<\/span> <span data-preserver-spaces=\"true\">is what<\/span><span data-preserver-spaces=\"true\"> happened with Austin, which is now almost synonymous with a pandemic-era boom-and-bust housing market.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">It\u2019s important to stress that this doesn\u2019t make Austin a <\/span><span data-preserver-spaces=\"true\">bad<\/span> <span data-preserver-spaces=\"true\">place to invest<\/span><span data-preserver-spaces=\"true\">. The current <\/span><span data-preserver-spaces=\"true\">decline in rents<\/span><span data-preserver-spaces=\"true\"> isn\u2019t drastic and is likely more corrective to the huge gains seen in previous years. While the massive wave of migration to Austin is perhaps over for now, this doesn\u2019t mean that no one is moving to the city. Its population is <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.macrotrends.net\/global-metrics\/cities\/22926\/austin\/population\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">still increasing<\/span><\/a><span data-preserver-spaces=\"true\">, and it\u2019s only a matter of time before the <\/span><span data-preserver-spaces=\"true\">very<\/span><span data-preserver-spaces=\"true\"> recent local <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.austinmonitor.com\/stories\/2024\/08\/as-construction-slowdown-continues-a-new-workforce-housing-project-takes-shape\/#:~:text=As%20construction%20slowdown%20continues%2C%20a%20new%20workforce%20housing%20project%20takes%20shape,-Friday%2C%20August%202&amp;text=While%20the%20pipeline%20for%20multifamily,workforce%20and%20middle%2Dincome%20residents\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">construction slowdown<\/span><\/a><span data-preserver-spaces=\"true\"> evens out the supply-demand ratio.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">A Single-Family and Multifamily Gap<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">The other unmistakable trend picked up in Zillow\u2019s report is the resurgence of single-family housing when compared to the somewhat sluggish growth observed in the multifamily sector.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Again, we\u2019re talking comparisons here. Multifamily rents still did well, just not as well as single-family. Multifamily rents rose in 40 out of the 50 metro areas studied, while a near-total 49 out of the 50 metro areas recorded year-over-year gains in the single-family sector. Single-family housing outperformed the multifamily <\/span><span data-preserver-spaces=\"true\">sector<\/span><span data-preserver-spaces=\"true\">, with nearly double the rental growth: 4.3% over 2.3%. <\/span><span data-preserver-spaces=\"true\">This<\/span><span data-preserver-spaces=\"true\"> is a substantial difference and great news for investors with single-family properties in their portfolios.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Interestingly, there is a lot of overlap between metro areas that did well in single- and multifamily sectors. Hartford, Cleveland, Louisville, and Providence were top for substantial rental growth in both segments, with Hartford recording an identical gain of 7.4% in <\/span><span data-preserver-spaces=\"true\">both<\/span><span data-preserver-spaces=\"true\"> single-family and multifamily rentals.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">What\u2019s Hartford\u2019s secret? The usual: a strong job market attracting young professionals, combined with years of chronic underbuilding of new homes. Although the Connecticut town is <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.ctinsider.com\/business\/article\/hartford-ct-high-rents-new-apartments-18586733.php\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">building thousands of new units<\/span><\/a><span data-preserver-spaces=\"true\">, it hasn\u2019t yet gotten anywhere close to plugging the demand, so rents are still rising rapidly. Hartford is still among metro areas with the least <\/span><span data-preserver-spaces=\"true\">amount of<\/span> <a class=\"editor-rtfLink\" href=\"https:\/\/constructioncoverage.com\/research\/cities-investing-most-in-new-housing\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">new construction<\/span><\/a><span data-preserver-spaces=\"true\"> permits, number eight in the list of top 10 underperforming metros in new construction across the country.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">It\u2019s the same story with Cleveland, where demand for rentals is <\/span><span data-preserver-spaces=\"true\">huge<\/span><span data-preserver-spaces=\"true\"> while new construction is still lagging <\/span><span data-preserver-spaces=\"true\">behind<\/span><span data-preserver-spaces=\"true\">. Cleveland also has the added aspect of having relatively few desirable residential areas, so demand is highly concentrated.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Will the same fate befall these metros as did Austin? Maybe, eventually, if they ramp up construction and then people stop moving there quite so much for one reason or another. <\/span><span data-preserver-spaces=\"true\">But this is why reports like Zillow\u2019s are so <\/span><span data-preserver-spaces=\"true\">useful to<\/span><span data-preserver-spaces=\"true\"> investors: you <\/span><span data-preserver-spaces=\"true\">have to<\/span><span data-preserver-spaces=\"true\"> ride the wave of high demand and <\/span><span data-preserver-spaces=\"true\">high<\/span><span data-preserver-spaces=\"true\"> rents while you can.<\/span><span data-preserver-spaces=\"true\"> If you are investing in an area that\u2019s actively building a ton of new homes while the incoming population is trending downward, expect <\/span><span data-preserver-spaces=\"true\">that rent growth will<\/span><span data-preserver-spaces=\"true\"> eventually fall and factor that into your ROI projections.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">The Takeaway<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Investors, especially those focusing on single-family units, will be pleased to learn that the rental market is alive and kicking. <\/span><span data-preserver-spaces=\"true\">With real estate activity likely to pick up even more next year, rents will continue rising in most areas, <\/span><span data-preserver-spaces=\"true\">but especially those with current<\/span><span data-preserver-spaces=\"true\"> high demand due to favorable labor market conditions.<\/span> <span data-preserver-spaces=\"true\">In fact,<\/span><span data-preserver-spaces=\"true\"> the conditions <\/span><span data-preserver-spaces=\"true\">might be<\/span><span data-preserver-spaces=\"true\"> ripe for a <\/span><span data-preserver-spaces=\"true\">little bit of a<\/span><span data-preserver-spaces=\"true\"> boom!<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Investors should watch for areas that got oversaturated with new construction as a response to pandemic-era population booms, as these markets may take a little while to rebalance after another wave of incoming residents boosts demand. For now, it\u2019s wisest to focus on areas that are experiencing an active surge in demand, but that haven\u2019t yet completed a substantial new construction push. These will almost certainly deliver you great returns on single-family investments.<\/span><\/p>\n\n\n\n<div id=\"hero-block_bb493dfe8fe3b1f781d48add00f8fc11\" class=\"first:mt-0 hero-block py-4  alignfull   has-background has-slate-50-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\"gap-10 lg:gap-20 flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 lg:w-1\/2 \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-slate-800-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Find the Hottest Markets of 2025!<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:18px\">Effortlessly discover your next investment hotspot with the brand new BiggerPockets Market Finder, featuring detailed metrics and insights for all U.S. markets.<\/p>\n\n\n\n<div id=button-custom-event-block_f1aaaae8d6f661d4b8b692a088d29268 class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/markets\" x-on:click=\"window.analytics.track(&#039;Blog Block | Market Finder&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/rental-market-report-nov-2024&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-gold-background-color has-text-color has-white-color\" target=\"_blank\">Explore Markets<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\"lg:w-1\/2 first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/07\/Market-Finder_Site-Module-1.png\" alt=\"\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>The newest Zillow Rental Market Report is out, and it\u2019s showing \u2018\u2018a softening of the rental market beyond regular seasonality.\u2019\u2019 Apparently, rental demand dipped double below what\u2019s typical for this [&hellip;]<\/p>\n","protected":false},"author":613618,"featured_media":174020,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7382],"tags":[],"class_list":["post-179071","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\/179071","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\/613618"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=179071"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/179071\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/174020"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=179071"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=179071"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=179071"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}