Over the past 18 months, there has been a buyer frenzy in the for-sale market, and many sellers have been overwhelmed with offers. But while last year might have been the Year of the Home Buyer, it is looking like 2022 will be the Year of the Renter, and landlords and property managers need to get ready for the flood gates to open!
The multifamily apartment sector has performed well, despite the challenges that the COVID-19 pandemic and economic recession have brought. The already robust rental market is poised to take off as demand is surging for rental housing, including both apartments and single-family options.
Why Rental Demand is Growing
There are several reasons why we’re seeing more individuals and families filling out rental applications.
- Many households have been priced out of the homeownership market—or have become discouraged by losing out against multiple offers—and they are deciding to hold off on buying home and rent instead.
- COVID-19 led many recent graduates and other young adults to move back in with their parents, either as they finished school or to avoid having to move during the pandemic. As COVID restrictions have been easing, these young people have started to flood the rental market.
- Job growth is expanding and wages are increasing. Many people have been able to save as a result of expanded unemployment benefits and direct federal assistance during the pandemic. More financial security will lead more people to look for a new place to live.
- However, existing renters are staying in their units longer, realizing that even with rent increases, they will be paying less to stay in their units than to look elsewhere. There is historically low turnover in apartment buildings and prospective tenants are competing for limited inventory.
The Big Rent Push
Multiple offers and bidding wars had become common in the for-sale market over the past year. Now, it seems like competition is heating up in the rental market, with more would-be renters vying for a shrinking number of available units. In the 3rd quarter of 2021, the average multifamily rent in Virginia was up more than 11% year-over-year. Rent growth has been even faster in some of the tightest local markets.
Get ready for even faster rent growth through the end of 2021 and into 2022. Don’t be surprised to see eager renters offer above asking rent and offer concessions to move in, just like we’ve seen on the home-buying side.