By: Kayla Matthews
Today's landlords and property owners currently face a clash between rising rental demand, changing regulations, declining profits and a shortage of affordable homes.
Many factors will influence the future of real estate and the rental market in the new year. Learn about the top rental trends for 2020 and how you can stay ahead of the curve.
1. The "Typical Renter" Is Changing
Historically, renting was a rite of passage and the first step you would take before venturing into homeownership. Renters used to be predominantly from younger generations.
Now, it's a lifestyle choice for any age. Studies show nearly one in two renters would prefer to own homes, but aren't in the position to buy.
Tactics for attracting and keeping renters must fit a broader demographic in 2020. Whether you target young professionals, families or retirees, make sure to offer rent prices for all income levels.
2. Shifting Focus to Gen Z
When talking about the future of renting, it's impossible to ignore the growing Gen Z cohort. Unlike past generations, Gen Z has never lived without technology, so leasing and marketing efforts should aim to incorporate technology in some way.
Gen Z is highly active on apps and the internet, which both serve as excellent platforms for marketing efforts. This upcoming generation also places importance on trust, equality and a more laid-back approach to communication.
To ensure you're successfully reaching Gen Z prospects, shed the formal language and opt for more casual messaging through technology.
3. Technology Use Continues to Grow
Technology is part of nearly every facet of the modern world, and the rental industry is no different. Technological amenities will continue to expand in 2020.
Within the next year, there will be tech solutions for nearly every aspect of property management. You should view these amenities as a revenue builder and offer them for free or as a subscription service for tenants.
Some top actions made easier by technology will be landlord communication, online rental payments, climate control, security and social communities. Also, renters will be requesting even more tech amenities, including free Wi-Fi, keyless door entry, outdoor fireplaces and heaters and high-tech fitness centers.
4. More Rental Incentives
Rental incentives will also shift to more digital rewards rather than rental discounts in 2020. Online rewards like e-gift cards, offering online rent payment options or installing updated appliances are all attractive incentives.
5. Rent Control to Have a Bigger Impact
States like New York and California enacted new rent control legislation earlier this year, with more regulations in the pipeline for other states. This legislation aimed to alleviate increasing rental costs and calm industry unease.
The New York metro area saw a 9.2% year-over-year decline in multifamily investment within the first eight months of 2019 due to the new regulations. In 2020, rent control will likely bring more debate between the housing and rental industries.
6. Rent Growth to Slow and Stabilize
In 2020, experts expect rent growth to slow and stabilize at a sustainable pace as wage growth and inflation level out. Since June of 2019, annual rent appreciation has been on the rise at around 2.3%.
Industry analysts predict the uptick in rental growth will continue at the start of 2020 and eventually taper off in the spring. Low mortgage interest rates should help keep rent growth from increasing too much, which will encourage more people to rent.
7. Investor Clients Will Outweigh Accidental Landlords
Accidental landlords will continue to exit the rental market in 2020. In their place, intentional investors will make up the majority of property managers' client base.
Property managers must prove their value to new groups of DIY landlords managing their rentals through apps. Make sure to tweak your services to fit your clients' needs, and 2020 will prove to be a fruitful year for your properties.