2024 Q2 Market Updates
Here’s the long and short of it — rental properties nationwide are sitting on the market longer and leads are at a historic low.
Time on the Market is at a High
March 2024 was the worst March rental market nationwide since ShowMojo began tracking this data. Unfortunately, this trend is likely to continue. Days on the market began rising in June 2023 and have continued to be higher than usual. While properties averaged around a month’s time on the market back in March 2022, this March averaged 36% higher. However, we’ve seen a slight decrease in days on the market since January, when a historically high average was reached.
Leads are Low
Another indication of slow rental market activity is the amount of leads per on-market period. Again, trends are far from ideal. According to ShowMojo’s records, March 2024 leads are the lowest they have been compared to previous Marches.
As mentioned in our newsletter about the high vacancy rate in Memphis, the oversaturation of current rentals — as well as new builds — directly correlates with these numbers. Fewer leads with more properties to choose from has led to more days on the market. This one of the many reasons to continue to make your investment property competitive, in price and appearance.
Some Good News
There is, however, a positive in the midst of these disappointing trends. While small, the amount of rent reductions are 1% lower in March 2024 than they were in March 2023. This is the first time in 17 months that reductions have not hit a record high.
How Some Owners are Adapting
There are only so many changes an owner or property manager can make during a slow market. However, one such change that ShowMojo has tracked is listings that allow pets. As we’ve mentioned before, allowing pets can make your investment more competitive and bring more traffic. ShowMojo shows that from 2022 to 2023, dogs were allowed in 12% more active listings. In that same period, listings that allow cats increased 8%.
Notes From Kendall
Notes from 901 Real Estate Services’ owner on the state of the market and keeping you informed.
Back in the late fall/early winter, we began to see a shift in the rental market as it began to soften. Now we are in the thick of it. In December 2023 market times were 12% longer than December 2022 and 47% longer than December 2021.
We are now seeing more rent reductions than we ever have in years past. The unfortunate reality is that we don’t see this market changing significantly for the next 7 months or so. Summer will obviously have a seasonal shift toward lower market times, but we don’t expect an actual recovery. That’s because the underlying fundamentals aren’t going to change in any drastic way.
Pandemic stimulus has come and gone. Household debt is back at historically high levels. Interest rates are the highest they have been in more than two decades. To top it off, short-term rentals and second homes are being converted to long-term rentals.
So what do property managers and owners do? This was a huge discussion at the annual Broker/Owner conference that I attended in April at Amelia Island in Florida.
901 Real Estate Services recently automated our appointment center to make it more convenient and easier for our prospective residents. We are seeing more qualified leads and positive feedback on how easy scheduling is. As some companies have implemented self showings, we have kept the human touch by having each showing led by a leasing agent. This has allowed us to start building relationships and trust earlier in the leasing process, resulting in more signed leases.
As we study the market, we want to keep all owners educated in order to make the best informed decisions. These decisions can include whether to raise rental rates or instead trying to keep your investment leased by not increasing rent at this time. It also may be time to make improvements to your property to make it more desirable in order to lease it more quickly. When your property comes available for lease, we can have that discussion with you.