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Why Homes Are Taking Longer to Rent: Fall 2023 A Shift in the Rental Market

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The rental market, like many other sectors, is experiencing a significant shift post-Covid. As the pandemic's financial support measures fade, interest rates rise, and seasons change, landlords and property owners are witnessing changes in the price they can achieve for their rental properties. This article delves into the factors behind this transformation and offers insights into what property owners can do to adapt to the evolving market conditions and correctly price their homes to lease in a reasonable amount of time. 

Can you show me the data? 

SFR Rent Growth Has Reset

Annual U.S. single-family rent growth slowed to 2.9% in August, the 16th consecutive month of declines.

📰 Where can I read more about this market shift?  

Overview: Why is this shift happening? 

  1. Post-Covid Adjustments: Rent prices were significantly higher when the economy was propped up with stimulus money. The rental market is resetting now that the interest rates have been higher for over a year. Data shows price adjustments across all major markets, but the impact varies by region. 
  1. Seasonality: Fall has historically been a slower time of the year. Over 2X the number of renters are moving in the summer months than the rest of the year. Fall and winter being the hardest times to lease properties because renter demand is lower. This applies to all markets. 
  1. Housing Supply Changes: The apartment industry has been building units, and economists state some markets are now overbuilt. Multifamily operators are running aggressive ‘move-in specials,’ making this housing more appealing to renters and putting pressure on single-family rentals. This trend varies by market. 

What does this change mean for property owners? 

Landlords should be prepared for a slightly longer vacancy period. It's essential to ensure properties are well-maintained, competitively priced, and offer the amenities tenants seek.

What tools does Sunroom provide to price my home competitively? 

  • Comparative Market Analysis (CMA) 
  • Stats that show leads, tours, and apps
  • Sunspot on-market activity report 
  • Ability to run a rent concession (a rent special)
  • Giving you tour feedback on 65% of the completed tours
  • Market data comparing your home to other homes nearby 

View this data in your investor portal by asking your property manager to share the link to your listing. 

In addition, Sunroom is handling all of the leasing fundamentals:

  1. Professional photography and marketing
  2. Advertising in all of the key places renters are searching for homes
  3. Offering self-tours for the majority of homes
  4. Working renter leads seven days a week, including nights and weekends
  5. Making a clear and streamlined rental experience for renters, which thousands of renters have used and signed leases with over the last few years

What steps should I take to price my home? 

Have a conversation with your property manager. Determine how your home is performing based on data provided by Sunroom.

How long before doing a price adjustment?

First, consider the CMA you receive when the home goes live. Then, after about a week, you’ll see how renters respond to your home's rent price and other demand factors. We suggest pricing adjustments within the first week or two when the home is on the market. Waiting can make your home stale on Zillow and drive up your vacancy exposure. 

What do I do if the rent I can receive now does not pencil out with my expenses?

There will be properties that made sense as investment properties before this shift that no longer make financial sense to hold. 

You’ll want to determine your fully loaded home operating costs, including property mortgages, insurance, taxes, expected return on investing holding the property, etc. You can use this to help define the price range you’re comfortable collecting.