What Landlords and Renters Should Expect in 2024

The latest Realtor.com Avail survey reveals a tricky scenario in the U.S. rental market: landlords show restraint in rent increases, but renters still face high costs that affect their homebuying plans.

Market stabilization: Chief Economist Danielle Hale of Realtor.com® notes a stabilization in the rental market since May 2023, largely due to an influx of new rental options. However, this has not significantly impacted prices, with median asking rent in 2024 expected to decrease by only 0.2% from 2023 levels. Interestingly, a 4.5% wage increase in January is helping to alleviate some of the financial burden for renters, making rents more affordable relative to income. 

Landlords adjusting rent strategies: The survey reveals a slight decrease in the number of landlords planning to raise rents in 2024, down to 60% from 65% in early 2023. Rent increases tend to vary for lease renewals and new tenants, with most landlords opting for 0-5% increases for renewals and up to 10% for new leases. This shift in rental strategy aligns with landlords experiencing over a 10% increase in ownership costs. Among those not raising rents, 72% believe their units are already at or above market value.

Renters feeling the squeeze: Renters are increasingly feeling the pinch, with 71% reporting rent hikes upon lease renewal. Most renters pay between $1,000 and $1,500 monthly, but a growing number are now paying up to $2,000. High rents are leading 63% of renters to consider alternatives to lease renewal, with 43% citing current rent as too expensive. Additionally, 34% of renters are negotiating rent increases, a tactic likely to gain traction given higher vacancy rates anticipated in 2024.

Impact on the housing market: The economic climate, marked by rising interest rates and inflation, is influencing renters’ home purchasing decisions. A significant 82% of renters acknowledge the economy’s impact on their housing plans. The main barriers to buying a home include insufficient down payment funds (61%) and high interest rates (42%). Consequently, there’s a slight dip in the proportion of renters considering home purchases in the near future.

➥ THE TAKEAWAY

Looking ahead: While there’s a slight shift towards stabilizing rent increases, both renters and landlords are adjusting their plans in response to the ongoing financial pressures. On the landlord side, high home prices and mortgage rates are curbing their enthusiasm for acquiring additional rental properties, with only 22% planning to buy more in the next 12 months. The majority, 73%, have no intention of selling any units from their portfolio, reflecting a trend towards maintaining current property investments amidst market uncertainties.

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