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  • Writer's pictureRealFacts Editorial Team

More Renters Are Staying Put Longer


Apartments for rent

As the dynamics of the rental market evolve, investors have an invaluable opportunity to capitalize on emerging trends. A recent study by Redfin highlights a significant shift in renters' behavior, revealing that more renters are choosing to stay in their units longer. This trend, if strategically leveraged, can provide substantial benefits to real estate investors.

In 2022, one in six renters, or 16.6%, stayed in their rental homes for ten years or more, an increase from 13.9% a decade earlier. This longer residency isn't isolated to the decade-plus category; similar trends are seen in other timeframes. For instance, 16.4% of renters lived in their homes for five to nine years, up from 14% a decade ago. Even those staying for one to four years have increased, with 41.8% of renters in this category compared to 39.9% in 2012. The only category showing a decrease was short-term rentals of 12 months or less, dropping from 32.2% in 2012 to 25.2% in 2022.


Financial Stability and Cost Savings


One primary reason for this shift is financial stability. Renters who remain in the same unit are likely to face smaller rent increases and save on moving costs and application fees. According to Sheharyar Bokhari, Senior Economist at Redfin, landlords also benefit from this stability as they save on costs associated with cleaning and marketing vacant units. For investors, this translates into lower turnover costs and a more predictable cash flow, enhancing the overall financial stability of their investment portfolios.


Rising Rental Prices and Affordability Challenges


The rapid increase in rental prices is another factor contributing to longer tenant stays. Since 2019, asking rental prices have soared by more than 20%, making it financially discouraging for renters to move frequently. Additionally, the dramatic rise in median home sale prices, which have more than doubled since 2012 and increased over 40% since 2019, has priced many renters out of the homeownership market. Elevated mortgage rates, near two-decade highs, further exacerbate this issue, solidifying the necessity for many to remain in their rental units.


For investors, this trend underscores the importance of pricing strategies. By keeping rental increases modest, investors can retain long-term tenants, reducing vacancy rates and turnover costs. Furthermore, maintaining a competitive rental price in a high-demand market can attract and secure tenants who are less likely to transition to homeownership due to affordability challenges.


Lifestyle Choices and Remote Work


Another layer influencing tenant retention is the evolving lifestyle choices, especially post-pandemic. The rise of remote work has allowed people more flexibility in choosing where they live, often leading them to prefer renting over buying to facilitate easier relocations for job opportunities or lifestyle preferences. Some renters also choose to invest their money in other areas instead of real estate, increasing their tenure in rental properties.


Investors can tap into this by marketing properties as ideal for remote workers, emphasizing amenities such as home office spaces, high-speed internet, and proximity to co-working spaces. Understanding and catering to the lifestyle preferences of this growing demographic can significantly enhance tenant satisfaction and retention.


Geographic Variations in Renter Behavior


Location also plays a crucial role in rental duration. Redfin's study revealed that renters move most frequently in cities like Austin, TX, Denver, CO, and Nashville, TN, where over 34% of renters stayed for 12 months or less in 2022. Conversely, renters stayed put the longest in New York, NY, Riverside, CA, and Los Angeles, CA, with less than 18% moving within a year. These patterns are influenced by local housing costs and the availability of affordable homeownership options.


Investors should consider these geographic trends when making investment decisions. In high-turnover markets like Austin and Denver, strategies might include offering flexible lease terms and incentives for lease renewals to encourage longer stays. In markets like New York and Los Angeles, where tenants are inclined to stay longer due to high housing costs, investors can focus on maintaining and enhancing property quality to keep long-term tenants satisfied and willing to stay even longer.

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