With the COVID-19 pandemic slowly subsiding, a spirit of change has ignited across the board, and the real estate industry has been no exception.
As markets across the country open doors and resume operations, there seems to be ample advice available on how to bounce back in this post-pandemic era, but what exactly can landlords, renters, short-term investors, and property managers anticipate from the year ahead?
Being well aware of certain predictions, trends and statistics can help you best equip yourself for success in these times.
Investing in rental real estate can be an especially tricky endeavor because the market fluctuates so frequently. However, knowing which localities and neighborhoods are going to boom next, or which type of space is in demand, takes both expertise and knowledge.
Thankfully, there are a few key indicators to pay attention to that can give you an estimate of which way the rental real estate market will swing.
Rental Real Estate Statistics for Investors
- Home values in the US have increased 7.2% since 2018. (Zillow)
- Most homes in the US (33%) are owned by individuals under 30 years of age. Furthermore, individuals in the age group of 30-44 years own 18% of homes, those in the age group of 45-64 years own 29% of homes, and those that are 65 years or older own 20% of homes. (NMHC)
- In 2007, around two-thirds of investors were primarily focused on the stock market. That number has fallen to 50%, with many Millennials choosing to invest in real estate instead. (RealWealth)
- By 2025, Millennials are expected to form more than 20 million new households. (Realty Biz)
- 91 of the 100 top housing markets have seen rent increases over the past year. (Apartment List)
- A projected economic downturn or recession could mean lower interest rates over the next year or two with the prime lending rate expected to decline to 4.75%. (Kiplinger)
- “Unexpected repairs and maintenance” was cited by 36% of homeowners as their biggest home buying regret. (Zillow)
- 2020 was projected to see the peak of Millennial home-buying. (realtor.com)
- Landlords receive an average of two applications for every property rental they list. (MySmartMove)
- As of April 2021, the average monthly mortgage American home owners are paying is $1,201. (Redfin)
- The typical owner-occupied home was built in 1978. (American Housing Survey)
- In 2021, the average days on market before an offer was accepted was 40. (Redfin)
- 12 million US homeowners spend more than half of their income on rent. (PWC)
- Dallas, Houston, and Miami are considered the strongest markets for buyers with the lowest numbers of competitive bids for houses. (Redfin)
- The average real estate market life cycle — involving a pendulum swing from a seller market to a buyer market and back again — is 10-16 years. (US News)
- The market size, measured by revenue, of the Real Estate Loans & Collateralized Debt industry is $429.0 bn in 2021. (Ibis World)
- In early 2021, mortgage rates hovered around all-time lows, according to Freddie Mac. The average rate on a 30-year, fixed-rate mortgage was just 2.74% in January, up from 3.62% the year before and 4.76% a decade prior. (Million Acres)
Rental Real Estate Statistics for Tenants
- Most renter-occupied homes in the US (49%) are owned by individuals under 30 years of age. Furthermore, individuals in the age group of 30-44 years occupy 29% of rental homes, those in the age group of 45-64 years occupy 19% of rental homes, and those that are 65 years or older occupy 9% of rental homes. (NMHC)
- There are close to 44 million (36%) renter-occupied homes in the United States, as compared to 75 million (64%) owner-occupied homes. (NMHC)
- As of April 2021, the average monthly rent American tenants are paying is $1,736. (Redfin)
- The number of over-60 renters increased by close to 43% from the period of 2007 to 2017 as retiring Baby Boomers chose to rent rather than buy when downsizing. (RentCafe)
- By the end of 2019, the average rent growth rate nationally was at 1.6%, lagging behind the 3.1% growth in wages. This was welcome news in the midst of the housing affordability crisis in most established markets. (Apartment List)
- The most expensive rental market is still San Francisco, with an average rental rate of $3,690. (Zumper)
- Close to 50% of renters are spending more than 30% of their income on rent. (PWC)
- The average rental home was built in 1974. (American Housing Survey)
- In a span of the past two years, multifamily property construction has increased by 21%, indicating an anticipated market shift toward rentals. (Born2Invest)
- In December 2020, close to 89% of renters made their rent payment – which directly implies that over 1 in 10 renters were not able to make rent. (NMHC)
Property Management Statistics
- The property management industry in the United States generates around $88.4 billion in annual revenue and is expected to grow further during the next few years. (iProperty Management)
- Revenue growth for the Property Management industry has been adjusted to reflect a decline of 0.9% in 2020 and 2.8% in 2021 due to decreasing business activity. (Ibis World)
- At 35%, most property managers manage communities of 101-500 units. (Buildium)
- Close to a quarter of all property managers work in an HOA (Homeowners Association) community. (NARPM)
- The majority of property managers cite Maintenance (31%) and Efficiency (32%) as their greatest challenges. (iProperty Management)
- Demand for property managers from residential markets was expected to be affected as more and more tenants either moved out, or failed to pay rent in 2020 and 2021. (Ibis World)
- Demand for property managers from commercial users was anticipated to be affected amid COVID-19 as businesses potentially declined to renew lease agreements. (Ibis World)
- The rental amenities most tenants are looking for at the moment are:
- Air Conditioning
- In-Unit Washer/Dryer
- Dishwasher
- On-Site Laundry
- Assigned Parking
- Central Heat
- Furnished
- Balcony
- Garage Parking
- Hardwood Floors
Source: (Zumper)
- There were nearly 291,978 property management companies in the United States in 2020. (Ibis World)
- The average cost of an annual property management software contract ranges anywhere between $1,000 to $5,000. (Capterra)
Vacation Rental Industry Statistics and Trends
- The U.S. vacation rental industry lost $1.1 trillion in economic output in 2020. Despite this, industry experts expect the industry to return to its trajectory of growth.
- The average rental price at popular destinations is $186 per night for a single or 2-person rental.
- Close to 65% of jobs lost in 2020 were either directly, or indirectly supported by the travel industry.
- Income from overseas inbound travel declined 74% amid the COVID-19 pandemic.
- Vacation rental businesses account for 31.3% of all privately owned accommodation establishments across the United States.
- Worldwide, there are close to 115,000 vacation rental companies at present, 23,000 of which operate in the U.S alone.
- 600,000 Americans use online platforms to rent out their houses, apartments, condos, and/or rooms to short-term guests.
- Around 21% of all vacation rentals are in the United States, while 60% are in Europe.
- As many as 70% of vacation rental companies are small businesses, managing 1-19 units.
- Close to 20% of all vacation rental companies are medium-sized businesses and manage anywhere between 20-99 units. Only 10% are large organizations that manage over 100 units.
- 2.58 million rental properties in the US are seasonally inhabited.
Source: (iProperty Management)
Be it investing, renting, managing a property, or even lending, real estate trends are always in flux.
Therefore, keeping yourself updated on past patterns, the latest industry happenings, and future predictions can take you a long way in ensuring you have that competitive edge over your counterparts to win more business and attract more leads your way.