How the renter profile is changing with income, tenure and lifestyle shifts now happening that property managers need to know.
By RentCafe
Persistent trends in the U.S. housing market over the last decade or so have fundamentally changed the typical renter profile. With home prices having risen by 81% since 2016 while average earnings only grew by 47%, many adults are struggling to step on the housing ladder.
A much broader range of demographics must now be considered and catered to by landlords and property managers. Alongside traditional renter profiles, such as students and young professionals, high-income, older and family households are actively seeking rental properties.
To intelligently adapt to modern conditions and appeal to the right kinds of tenants for different asset types, property managers must identify and understand the income, tenure and lifestyle shifts that have changed and will continue to shape the typical renter profile for years to come.
The Rise of the Affluent Renter
As average home prices continue to rise, so too is the average income of American renters. In recent years, renter households with an annual income of $100,000 or more grew by more than 50% across much of the U.S., introducing a novel type of renter profile to many landlords.
“Many agents and property managers have seen increased demand from high-income renters in recent years” says Northern Virginia Realtor Darren Robertson. “Oftentimes, these types of prospective tenants are looking for rentals that place much greater focus on luxury amenities.”
Property managers should be aware of the growing demand for convenience-driven amenities and features prioritized by this demographic. By upgrading rentals to leverage smart home features, leisure facilities and coworking amenities, the needs of this profile can be addressed.
The Growing Market for Older Renters
At most income levels, the average age of prospective renters is rising. Increasing numbers of working adults are finding themselves priced out of home ownership at present, meaning rent lifecycles as a whole are trending upwards as older renters commit to longer tenancies.
According to data published by John Burns Research and Consulting, more than 70% of U.S. renters are now aged 30+, the highest share the firm has ever recorded. As the average age of tenants increases, so too do retention rates, with 92.5% retaining at least a two-year lease.
Property managers should factor these insights into management and marketing plans. For older renters who intend to stay in a property longer, safety and security features should be prioritized, like access control, video security and fire and cigarette smoke detector systems.
Increased Demand for Practical Amenities
Across many demographics, though particularly lower-income and older renters, demand for practical amenities above luxury features is growing. For renters who have no active plans to step on the housing ladder in the near future, amenities built to meet real needs are a priority.
According to data published by Bidwells, practical amenities are prioritized far above luxury features by most renters. For example, high-speed Wi-Fi, laundry facilities and secure access are prioritized by 85%-88% of renters while gyms and workspaces are only desired by 66%.
For property managers looking to attract a broader range of renter profiles, efforts to simplify and streamline amenity offerings will likely prove beneficial. Increased focus on practical and helpful features intended to make daily living more convenient should be routinely prioritized.
Rising Interest in Living-as-a-Service
Finally, as a way to address modern renter needs and offer an attractive, forward-thinking alternative to traditional homeownership, increasing numbers of landlords are exploring Living-as-a-Service (LaaS) models that provide a subscription-based approach to renting.
LaaS models can speak to the needs of the 68% of renters who do not view homeownership as part of their ideal life trajectory. Through LaaS, tenants can be provided a fully-managed rental experience to best meet practical needs built around a flexible, low-commitment lease.
LaaS and similar subscription-based models represent just over 15% of the growing coliving housing market. Property managers who already oversee multi-family rentals and apartment buildings might consider adopting LaaS models to speak to this growing renter demographic.
Final Thoughts
The rental market has changed significantly in recent times and looks to remain on a similar trajectory in the coming years. For landlords and property managers, understanding exactly how the modern market has changed the renter profile through income, tenure and lifestyle shifts can help to inform impactful improvements to marketing and management strategies.
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