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Rental Trends for 2022

As 2021 comes to a close, the conversation around housing across North America has shifted to affordability, accessibility, and remote work impacts.

Let's take a look at some key findings from Zillow's Consumer Housing Trends Report to see what's in store for 2022.

Reports of the 'Death of Cities' are greatly exaggerated

Data suggests that the predicted mass exodus of renters from cities just didn't happen. It was forecasted that once people could work remotely, waves of them would leave the high-priced, high-density city. However; the data shows that there was only about a 2% increase in those people who moved to a different area altogether.  This is backed up by data around what neighborhood characteristics renters value comparing 2020 to 2021, we don't see a huge change. Renters still want amenities that cities provide - walkability, easy commute, and close to shopping seem to still be more important than getting a bigger place.

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Budget is the #1 Priority of Renters

Rent increases tend to trigger tenant moves, and 2021 was no exception. Among renters who experienced a rent hike, 85% report that the increase impacted their decision to move. Last year, renters in multifamily buildings were twice as likely to say they experienced a rent hike at their previous home than renters in single-family detached homes. This year, the percentage of renters in the two groups who report receiving a rent increase at their previous home is the same (47%)  suggesting that many multifamily buildings may have held off on increasing rents to retain tenants.

It's simple economics - now that most renters pay more than 30% of their income on housing, unexpected expenses and rent increases put a squeeze on an already incredibly tight budget. 38% of all renters cannot afford an unexpected expense:

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If you have a great tenant, you may want to reconsider that rent hike as that has a direct impact on retention, particularly in 2021. Affordability is going the wrong way right now as a national trend - something to keep in mind. 

Security deposits are still the norm - the vast majority of renters paid security deposits in 2021. The share of renters who pay a security deposit dipped slightly year over year, going from 90% in 2020 to 88% this year, although the median deposit increased from $678 to $700.  (Please note: median deposits vary widely according to region).

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Competition for Rentals is Fierce

Regionally, supply and demand will be different. But across the country, many tenants are needing to apply to multiple properties before landing their rental. The typical renter in 2021 submitted two applications before finding a home. While the overwhelming majority of renters (86%) submit at least one application, 61% apply for two or more properties which is an 11-point increase from 2019. Only 14% of renters submit no applications.

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The bump in rental applications correlates to the increasing adoption of digital tools that make it relatively easy to apply for a rental if the listing catches a renter’s eye — but tech is not the only likely reason for the rise. Renters who apply for more properties also may lack confidence in their ability to qualify for a rental, especially in competitive urban markets where desirable homes can get snapped up quickly. Given the economic fallout from the pandemic, a surprising number of renters (79%) say they are at least somewhat certain they will qualify for a rental when they apply. Still, only 42% say they are completely certain, and 21% (nearly a quarter of all renters) say they’re less than certain they’ll qualify when they apply. Our recommendation to the 21% who are uncertain they'll qualify is to understand their credit score and enroll in tools to improve it (Like Credit Builder!)

Online Tools are Crucial

In just three years, landlords and property managers have made meaningful progress in accommodating renter preferences around online rental payments. In 2018, 36% of renters typically paid their rent online. In 2021, it’s 52% (a 16-point jump). The youngest renters appear to be driving the trend the most. Gen Z, ages 18 to 26, leads the way in online rent payments, with 64% reporting that they typically pay that way. About half (51%) of millennials, ages 27 to 41, say they pay that way too. That makes 2021 the first year where a majority of both Gen Z and millennial renters report paying their rent online.

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Renters’ use of digital tools to sign leases has also seen substantial gains in 2021. In fact, 35% of renters sign their leases online (a 5-point increase from 2020 and a 14-point jump over 2018) when 21% of renters signed remotely. Although the trend has climbed steadily, a majority of renters (56%) still sign paper leases in person. That’s not to say they prefer it that way. In fact, more renters would sign electronically if given the option.

Few things highlight the importance of offering renters both tech and in-person experiences more than the report’s findings on renter preferences for digital tools and in-person experiences. More than 7 in 10 renters (71%) agree somewhat or completely that they’re more likely to view a home if the listing includes a floor plan they like — a 4-point increase over 2020. The same percentage of renters also agree that the only way to really understand the layout of a home is to see it in person.

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Takeaways for 2022

If you are a property owner, you'll need to adopt more digital tools. 3D virtual tours, online applications/leases, online rental payments are all crucial to renters and continue to set your property apart. 🚀

If you are a renter looking to move in 2022, be prepared to compete for the property if you are looking in a highly desirable area, consider a Tenant Profile where you are pre-screened to set yourself apart, and make sure your moving budget includes funds for a security deposit (ask the property owner what this is upfront!).  👍

Source: ZillowRentals Consumer Housing Trends Report 2021.

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