Renters are gaining the upper hand in the balance of power with landlords.
Apartment units are staying on the market for longer. Vacancy rates are rising. And rental growth is slowing.
Now, landlords are being forced to offer sweeteners like free parking and free weeks of rent to get tenants to sign on the dotted line.
The share of rental listings on Zillow offering a concession as an incentive to rent climbed to 33.2% in July. That’s flat from June, but up from 25.4% a year earlier and well above the recent low of 19.4% two years ago, according to Zillow.
“Landlords are basically in a race to get tenants, so they’re throwing in a bunch of deals and perks to sweeten the pot,” said Orphe Divounguy, senior economist at Zillow. “Renters have more bargaining power.”
Deals are especially popular in six major metros areas, where more than half of the rental listings on Zillow are offering sweeteners: Raleigh (53.3%), Charlotte (53%), Atlanta (52.2%), Salt Lake City (50.9%), Nashville (50.8%) and Austin (50.5%).
All of those markets have experienced an increase in landlord concessions over the past year, led by Charlotte, where the share of units offering incentives increased by nearly 16 percentage points.
Natalie Garcia, a 23-year-old graduate student in Arizona, had no trouble finding a deal when she was hunting for a place to live with her boyfriend this spring.
“Honestly, all of the apartments I was looking at were running promotions,” Garcia said in a phone interview with CNN.
Garcia and her boyfriend ended up getting half off the first month of rent at a one-bedroom apartment they recently moved into in Scottsdale. “The concession was a bonus,” she said.
Rylee Dunham secured a free month of rent after she and her boyfriend offered to fix a broken fence at a two-bedroom apartment they were looking at in Gilbert, Arizona.
“We totally lucked out,” said Dunham, a 23-year-old school teacher. “I think we would have gotten the free month of rent anyway.”
Despite these concessions, the cost of housing remains a sore spot in the economy.
Shelter accounted for almost 90% of the monthly increase in consumer prices across the economy in July, according to the Bureau of Labor Statistics. Shelter prices jumped 5.1% from last year, although that represents a deceleration from recent trends.
Apartment rents are still getting more expensive, increasing by 5.1% over the past two years, according to Zillow.
However, that’s in-line with historical trends and marks a major improvement from the 22.3% spike during the prior two years.
The shift in the balance of power in favor of renters has been driven in part by a building boom for apartments.
In June, nearly 60,000 multifamily units were completed across the United States, according to government data. That’s the biggest increase in supply since 1973.
The recent building boom has made it harder for landlords to fill some units. The rental vacancy rate remains at 6.6%, the highest since the winter of 2021.
Divounguy, the Zillow economist, said falling mortgage rates could also work to the advantage of tenants by encouraging some would-be renters off the sidelines and into the housing market.
“By being proactive, informed and realizing their leverage, renters can make the most of the perks landlords are offering,” Divounguy said.
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