Landlords Offer Concessions to Attract Renters Amid Rising Costs
As rents continue to climb, landlords are increasingly offering discounts and incentives to secure tenants. A new Zillow report shows a significant rise in rental concessions across the U.S.
Landlords nationwide are employing a range of concessions, such as rent discounts and waived fees, to attract tenants as rental prices continue their upward trend. Zillow's June Rental Report indicates that 39.7 percent of rental listings on the platform included some form of concession, marking an increase from 35.2 percent a year prior.
While the typical U.S. asking rent rose 2.2% year-over-year to $1,965 in June, an increase in housing supply is providing renters with more choices and competitive pricing in certain markets. Orphe Divounguy, senior economist at Zillow, stated that increased construction is boosting supply, which helps to moderate rents and benefit renters directly.
Markets that have seen substantial new housing construction are rewarding renters with more options and concessions. In contrast, areas with less new development are experiencing rapid rent increases and slow improvements in affordability.
From an investor's perspective, offering concessions is often viewed as a financially prudent strategy. Ben Mizes, president of Clever Real Estate, described these concessions as an acquisition cost. Avoiding negative cash flow from a vacant unit is frequently more beneficial long-term than incurring costs for utilities, maintenance, and advertising an empty property.
Zillow identified Sun Belt markets as offering the largest concessions currently. These regions have also experienced significant new housing development, contributing to increased supply and more competitive rental rates.