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Landlords in certain areas of the U.S. are offering discounts to attract tenants while keeping asking rents near record highs.
The median U.S. asking rent in August rose to $2,052, up 0.7% from the month prior and only $2 below the record high set a year earlier, according to recent data from real estate brokerage Redfin.
Meanwhile, the national rental vacancy rate reached 6.3% in the second quarter, which is the latest data available. That figure is just shy of the 6.4% vacancy rate reached during the first quarter, the highest seen in two years, according to Redfin.
With surging prices and vacancies on the rise, some landlords are offering anywhere between one and three months free to attract renters without lowering their asking rents, according to Rent. CEO Jon Ziglar.
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It’s similar to what landlords, especially in major metropolitan areas, were forced to do during the pandemic when renters were fleeing cities. However, a year ago, when demand was surging, concessions were less common.
A “for rent” sign in front of a home on July 12, 2023, in Miami, Florida. (Joe Raedle/Getty Images / Getty Images)
As a result of these new concessions, rents are coming down in certain areas even though the declines don’t show up in asking-rent data.
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“Higher-end properties are beginning to see pressure in certain markets as a significant portion of new units coming online are in the higher-end and luxury segment,” Ziglar said.
A sign is posted in front of a home for sale on June 09, 2023 in San Francisco, California. (Justin Sullivan/Getty Images / Getty Images)
At the same time, there is still “a lot of competition for more affordable units due to less new supply, as well as increased pressure on consumer wallets limiting the ability to stretch for that higher level experience,” he added.
The good news is that while rents are still sitting near record highs, rent growth is cooling due to slowing household formation, economic uncertainty, affordability challenges and an increase in rental supply, Redfin said.
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Over the past two years, rents have been posting large year-over-year gains because of surging demand. For instance, in August 2022, the median asking rent was up 12.3% from the prior year.
