- Rent concessions have risen in 40 of the 45 largest U.S. metros, with one in three rentals offering incentives like free rent or parking.
- The Zillow Observed Renter Demand Index has fallen 23.3% since July 2023, driven by a surge in new apartment supply rather than declining demand.
- Despite concessions, affordability remains a challenge, with typical rents in July at $2,070, up 3.4% YoY.
As the U.S. rental market contends with a surge in new apartment supply, rent concessions are on the rise in nearly every major metro, as reported in Globest.
More Freebies, Please
According to a Zillow report, 40 out of the 45 largest U.S. metro areas are seeing more renter concessions than in 2023, with property owners offering perks like free rent and/or parking to entice tenants.
In July 2024, one in three rental listings on Zillow offered at least one concession, up from one in four in 2023. From June to July, more concessions were noted in 25 metro areas, while 24 metros saw a slight decrease.
This shift reflects a broader trend as landlords respond to an influx of new apartments hitting the market, which has impacted the overall rental landscape. Landlords are dealing with growing financial pressures as rent growth slows and competition intensifies.
Affordability Trends
Zillow’s Observed Renter Demand Index, which measures rental market tightness, has dropped 23.3% since July 2023. The somewhat good news is that this decline is attributed more to the sheer number of new units entering the market than to declining demand.
The rental vacancy rate remained steady at 6.6% in Q2, the same level it held in Winter 2021. Yet, despite all the concessions, affordability remains a concern, with typical rents now requiring 30% of median renter income, hovering on the edge of what’s considered ‘affordable.’
The typical asking rent in July 2024 was $2,070, edging up 0.4% from June and 3.4% since 2023. Rent hikes were reported in 48 of the 50 largest U.S. metro areas. Single-family rents saw a sharper 4.7% increase YoY, reaching $2,294. Multifamily rents also rose 2.6%, with an average rent of $1,916.
What’s Next?
As apartment affordability continues to be a major concern for most renters, many industry observers are speculating whether the current trend of slow rent growth and more concessions will persist, or if rents might eventually have to slip back down and stabilize.
