SEATTLE, Sept. 1, 2020 /PRNewswire/ -- Rental concessions
on Zillow® listings are now nearly twice as common as they were in
February, as landlords strive to attract new tenants in a rental
market that has softened considerably since the coronavirus
pandemic took hold.
The share of rental listings on Zillow that advertise some form
of concession rose from 16.2% in February to 30.4% in July. That
includes discounts like free months of rent or parking, offering a
gift card, or even waiving a deposit fee. Only 12.5% of rentals
advertised concessions last July.
Of the six types of concessions tracked in the Zillow study,
free weeks of rent was by far the most common. With relief ranging
from two weeks to two months, free rent made up 90.8% of all
promotions offered across the U.S and ranked as the top concession
choice in all but six of the 50 largest markets. Reduced or waived
deposits (9.1%) and gift cards (6.6%) followed. The median amount
of free rent offered is six weeks, which equates to an 11.5% annual
discount. For the typical U.S. rental, that would mean about
$200 in monthly savings.
Landlords appear to be choosing to offer concessions rather than
reduce rent to entice tenants to their buildings, as demand for
rentals has waned since February.
"Before the pandemic, rent growth was accelerating and the
nation was seeing concessions dwindle. That trend reversed sharply
after the pandemic hit in February," said Zillow economist
Joshua Clark. "In a softer rental
market, landlords are trying to push the right button to bring
renters into their space."
A survey of renters taken in April as part of Zillow's 2020
Consumer Housing Trends Report[1] found that
55% reported receiving at least one concession or perk in their
rental agreement. Among renters who received at least one
concession, the most common were parking (35%) or at least a month
of free rent (34%), followed by a reduced monthly rent price
(23%).
Renters in multifamily and other home types are more likely to
receive some sort of concession than those in single-family
rentals: 63% of multifamily renters report getting at least one, as
do 59% of renters in other home types. Only 35% of single-family
renters reported receiving any concessions. That means the increase
in concessions is likely to be most prevalent in the multifamily
buildings common in urban cores, which is consistent with previous
Zillow research showing urban rents have been hit harder than
rent in the suburbs during the pandemic.
Renters will most often find discounts in Washington D.C. -- 57.5% of listings
advertised at least one type concession in July. Charlotte (53%) and Austin (47.1%) had the next-highest shares.
These are all up dramatically from July
2019, when 27.4% of rentals in Washington D.C. were offered with
concessions, Charlotte had
29.4% and Austin just 15.3%. The
only metro that saw concessions go down since February is
Jacksonville (down 0.8 percentage
points).
Concessions have flattened in some of the nation's most
expensive markets, where rent is dropping. July rents were down
year over year in the metros of New
York (-2.6%) and San Jose (-2.2%). The share of concessions
in New York rose from 8.8% in
February to 14.9% in April, before easing down to 13.8% in July.
Likewise, concession share in San Jose moved from 21% in February
to 46% in June, then down to 40.1% in July.
"Concessions can often be a leading indicator of a coming price
drop in that landlords will often offer them first, before reducing
rent. If owners feel concessions are no longer moving the needle,
they'll reduce prices," Clark said. "Many landlords prefer to offer
a concession rather than cut rent and set a precedent that could
linger when the market picks back up."
One of the biggest challenges for property managers since the
beginning of the pandemic has been capturing prospective tenants'
interest in a space without the option of an in-person tour, said
Bevan White, vice president of
marketing at Pegasus Residential.
"When our teams switched to a virtual leasing environment in
late March, they had to adapt quickly as they couldn't physically
show an apartment home with an in-person tour, one of the major
tools we have to build value," White said. "Teams have used teaser
photos, pre-recorded walk-throughs of amenities and even
personalized recorded messages to capture the renters' interest
before conducting a full virtual tour with the site team."
Without in-person tours in their toolbox, Pegasus has looked for
new ways to add value for tenants beyond offering concessions. "We
have slightly increased concessions in some markets, and we have
also focused on increasing the availability of smart homes as a way
to add value to a unit instead of simply offering free rent," White
said.
U.S. rents grew 1.2% year over year in July, down from 3.9% in
February and 3.5% in July 2019. More
renters than last year have missed payments amid record levels
of unemployment, and that may increase after extended unemployment
benefits have expired. A Zillow study in June found that
approximately 2.7 million U.S. adults moved in with a parent or
grandparent in March and April, another recent hit to rental
demand.
Prevalence of
rental concession types
across the U.S.
|
Concession
|
Rank
|
Share
|
Free rent
|
1
|
90.8%
|
Waived/reduced
deposit
|
2
|
9.1%
|
Gift card
|
3
|
6.6%
|
Free
parking
|
4
|
2.3%
|
Waived application
fee
|
5
|
0.6%
|
Waived broker
fees
|
6
|
0.1%
|
Metropolitan
Area*
|
Share of
Rental
Listings with
Concessions,
July 2020
|
National Rank,
Share of Listings
with Concessions,
July 2020 (among
50 largest metros)
|
Share of
Rental
Listings with
Concessions,
July 2019
|
Share of
Rental
Listings with
Concessions,
February 2020
|
United
States
|
30.4%
|
|
12.5%
|
16.2%
|
New York/Newark,
NY/NJ
|
13.8%
|
46
|
7.1%
|
8.8%
|
Los Angeles,
CA
|
36.1%
|
20
|
18.5%
|
19.0%
|
Chicago,
IL
|
27.6%
|
31
|
8.8%
|
14.8%
|
Dallas-Fort Worth,
TX
|
38.9%
|
12
|
22.3%
|
26.7%
|
Philadelphia,
PA
|
30.7%
|
26
|
15.3%
|
14.4%
|
Houston,
TX
|
29.4%
|
29
|
16.4%
|
18.9%
|
Washington,
DC
|
57.5%
|
1
|
27.4%
|
33.7%
|
Miami-Fort
Lauderdale, FL
|
25.7%
|
33
|
10.5%
|
15.3%
|
Atlanta,
GA
|
45.8%
|
6
|
20.1%
|
21.1%
|
Boston, MA
|
19.5%
|
44
|
2.8%
|
6.7%
|
San Francisco,
CA
|
41.2%
|
10
|
11.9%
|
16.4%
|
Detroit,
MI
|
21.3%
|
42
|
12.8%
|
15.6%
|
Riverside,
CA
|
20.8%
|
43
|
6.9%
|
9.6%
|
Phoenix,
AZ
|
38.0%
|
14
|
10.2%
|
16.1%
|
Seattle,
WA
|
37.5%
|
17
|
16.7%
|
17.5%
|
Minneapolis-St. Paul,
MN
|
45.0%
|
7
|
10.4%
|
24.6%
|
San Diego,
CA
|
29.8%
|
28
|
15.7%
|
17.2%
|
St. Louis,
MO
|
23.3%
|
38
|
7.5%
|
10.1%
|
Tampa, FL
|
32.0%
|
23
|
18.5%
|
20.8%
|
Baltimore,
MD
|
47.0%
|
4
|
25.3%
|
27.0%
|
Denver, CO
|
43.2%
|
9
|
24.7%
|
32.0%
|
Pittsburgh,
PA
|
13.4%
|
48
|
3.9%
|
6.3%
|
Portland,
OR
|
38.0%
|
13
|
18.7%
|
26.1%
|
Charlotte,
NC
|
53.0%
|
2
|
29.4%
|
33.2%
|
Sacramento,
CA
|
23.0%
|
40
|
5.9%
|
9.3%
|
San Antonio,
TX
|
37.3%
|
19
|
24.3%
|
25.1%
|
Orlando,
FL
|
46.7%
|
5
|
21.0%
|
27.5%
|
Cincinnati,
OH
|
25.0%
|
34
|
9.0%
|
10.0%
|
Cleveland,
OH
|
37.7%
|
16
|
11.2%
|
14.4%
|
Kansas City,
MO
|
32.8%
|
22
|
14.5%
|
14.9%
|
Las Vegas,
NV
|
31.1%
|
25
|
8.8%
|
13.7%
|
Columbus,
OH
|
23.5%
|
37
|
15.6%
|
16.1%
|
Indianapolis,
IN
|
30.0%
|
27
|
22.7%
|
23.5%
|
San Jose,
CA
|
40.1%
|
11
|
12.8%
|
21.0%
|
Austin, TX
|
47.1%
|
3
|
15.3%
|
21.3%
|
Virginia Beach,
VA
|
17.9%
|
45
|
12.7%
|
17.4%
|
Nashville,
TN
|
37.9%
|
15
|
21.1%
|
21.1%
|
Providence,
RI
|
12.4%
|
49
|
5.8%
|
5.4%
|
Milwaukee,
WI
|
25.7%
|
32
|
10.0%
|
14.5%
|
Jacksonville,
FL
|
24.0%
|
35
|
17.3%
|
24.8%
|
Memphis,
TN
|
23.7%
|
36
|
13.4%
|
10.8%
|
Oklahoma City,
OK
|
6.2%
|
50
|
5.3%
|
4.8%
|
Louisville,
KY
|
37.5%
|
18
|
19.6%
|
22.0%
|
Hartford,
CT
|
27.9%
|
30
|
9.0%
|
15.6%
|
Richmond,
VA
|
34.2%
|
21
|
8.9%
|
18.9%
|
New Orleans,
LA
|
22.0%
|
41
|
5.5%
|
8.7%
|
Buffalo,
NY
|
13.8%
|
47
|
3.2%
|
1.8%
|
Raleigh,
NC
|
45.0%
|
8
|
22.7%
|
26.7%
|
Birmingham,
AL
|
23.2%
|
39
|
4.2%
|
13.3%
|
Salt Lake City,
UT
|
31.3%
|
24
|
20.8%
|
27.3%
|
|
*Table ordered by
market size
|
About Zillow
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ZG).
|
|
|
|
1
|
Survey was conducted
by Zillow Group as an online quantitative survey. The
self-administered study was fielded between March 31, 2020 and
April 21, 2020. Responses were received from 12,000 key household
decision makers who self-identified as a recent home buyer, recent
home seller, current homeowner or current renter.
|
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SOURCE Zillow