We’re well into 2017 and we can now see some new trends emerging in the rental market. Landlords and property owners should take note to ensure they’re prepared for the future of the industry. Ready to find out what’s in store for the rest of the year? Here are 5 noteworthy rental market trends in 2017:
As many young people have been the victim of the recession, thankfully opportunities are now finally opening up for them to buy homes. Now, enough time has gone by since the recession that credit scores are no longer negatively affected. With a better financial situation where debt from student loans and poor credit is now gone, this segment is beginning to form a greater portion of home buyers, which means that rental markets could become more competitive.
On the other hand, baby boomers may also be looking to downsize, creating a potential new market segment. A changing focus from young renters to seniors may be a profitable way to keep your property popular.
Slowing Rent Growth
Rent appreciation across the nation is slowing according to a Zillow report. While about a year and half ago rent appreciation was at 6%, now it’s only growing at 1.7%. However, there are some areas of the country that can expect greater growth. The LA area is included in these regions, where Zillow reports that growth at 4.8% is expected this year.
Rising Renovation Costs
Construction prices are rising through the roof due to a lack of skilled labour that is needed to complete jobs. In addition to a general shortage of labor as baby boomers exit the labor force and younger generations are delayed in their ability to join, immigration policy may affect the issue one way or the other. Where labor is short, projects also take longer to complete. What does this mean for you? If you are planning on any renovations anytime soon, you may be better off doing it sooner rather than later.
Overall Housing Market Decline
While younger populations are now joining the ranks of home buyers, the industry as a whole is still declining. As of July 2016, home ownership had dropped to record lows, the lowest it had been since 1965. What does this mean for rental real estate? People will still be looking for rental properties and there is still a considerable market for renting.
Housing occupancy data shows that population growth and young adults moving out of their parent’s home, divorced couples and other situations are creating a steady growth of new households being set up. Not all of these new households will be in newly purchased homes. Some will be renters. This means that demand may remain steady for rental properties, or even grow.
Overall, things are still looking good for rental property owners this year. However, getting the right match for your property and keeping it occupied with tenants can still be a challenge. If you need help with your property management, consider using a property management service such as A Creative Property Management. Give us a call at 714.881.5655 to find out what we can do for you!