Renters are putting off moves due to fear of the unknown, hunkering in place until they have a clearer picture of the market, and having trouble finding a home that suits their budget, according to a survey in the Zumper State Of The American Renter Report.
“Rent prices are nearly always a harbinger of other economic indicators. We’re seeing pandemic-era trends begin to unwind, and we expect that to accelerate—in nearly every sector of the economy—over the next six months or more, ” Zumper CEO Anthemos Georgiades said in the report.
Renters Think The Country Is In A Recession
The survey says 76 percent of respondents think the country is in a recession and as a result their lifestyle choices are shifting and renters are putting off moves.
- New household formation is shrinking
- Occupancy is down
- Prices are beginning to level off or decline in many markets
Rental market impacted by home ownership getting out of reach
The survey says people “priced (or scared) out of the home-buying process have created pressure on the rental market—and, perhaps, helped prevent rent prices from dropping more drastically.
“Markets that became accustomed to all-cash bidding wars and listings staying online for under a day are now seeing homes sit on the market for weeks or months. Today’s interest rates are driving even more people out of the home-buying process and chipping away at confidence in the idea that owning a home is part of the “American dream.”
Other highlights from the report
- 51.5 percent believe the new American dream is being untethered to homeownership and yet 36 percent of survey respondents said they’re spending more than 45 percent of their incomes on rent
- Money saving hacks; ditching coveted amenities saves hundreds per month etc.
- Post-pandemic winners: Florida, NYC, Jersey City
- Post-pandemic losers: Boise, Austin and Phoenix
- New York City will end 2023 the reigning most expensive metro
Conclusion: What does 2023 look like?
“Given the amount of demand for rental homes (including from people priced out of buying a home), we don’t expect to test a new bottom of the market. Occupancy will continue falling, but it isn’t likely to fall below 94 percent (which is considered the bottom end of our industry’s normal range).
“As new household formation continues to shrink and consumers put off big moves until the economic picture is more clear, we do expect rents to decrease across much of the country for at least the first quarter of 2023. But, by around mid-year, consumer confidence will likely improve significantly, and renters will help drive the economy with more optimistic spending habits. By the end of 2023, we’ll potentially see the first “normal” season since 2019,” the report says.
“Our industry will certainly need to weather the upcoming storm but, overall, will do very well over the next decade,” Georgiades said in the report.