Rent Prices Are Up, But So Are Renewals
According to a recent article in the Triad Business Journal, on the national level renters are opting to remain in their current units, even as rental rates soar.
Jay Parsons, vice president and head of economics and industry principals at RealPage, says that the spike in renewals in 2020 was to be expected, as government mandates and restrictions caused more renters to stay in place. What is surprising, he observes is that once the lockdowns were lifted renewl rates did not go back down. He points to a tight housing market as one of the primary reasons. RealPage reports that more than 57% of tenants in market-rate units with an expiring lease chose to renew in the past year.
In a competitive market, a renter will most likely have to pay more to move to another apartment in the same area than if they stay put in their current apartment, even if there is an increase in rent year over year.
Matt Vance, Americas head of multifamily research at CBRE explains, "One might expect strong rent growth to push people out, but the record-low vacancy makes it difficult to find an alternative home — and considering rent growth is consistent across all property types (with historically low concessions like free rent), it doesn’t represent the same money-saving opportunity it has in the past."
You can read the full article in TBJ here.