Ever since the financial crisis and recession began over 4 years ago, our country has increasingly become a nation of renters. Home ownership peaked at 69% during the housing boom only to decline rapidly to a now 15-year low in 2012. Will 2013 turn the tides back, as interest rates stay low and the job market improves? Or have the volatile markets this past decade turned an entire generation away from real estate investments? What new surprises will 2013 bring?
We see a broad cross section of the rental inventory and what real estate professionals are doing to price and market their listings. With that,Â I am happy to present to youÂ RentHopâ€™s Eight Predictions for 2013:
1.) Rents will continue to rise as the economy improves and demand increases.
â€“ Current tenants will see large rent increases this year in most cities.
â€“ A stabilizing job market will push up demand for housing.
â€“ More younger adults will find jobs and leave home to acquire their own housing.
2.) Inventory will be much tighter than the last few years.
â€“ Finding great deals in desirable locations will be harder than ever.
â€“ Most advertised apartments will be very bad deals in competitive cities and renters will have a difficult time wading through low quality supply.
3.) More rental supply will come from individual owners of condos, houses, and co-ops.
â€“ The record low interest rates from the last several years pushed many people into purchasing homes for residence or investment.
â€“ Many individual real estate investors now hope to sublet the apartments to fund their holding costs while they wait for the housing recovery.
4.) Urban areas such as New York City and Boston will become much more reliant on brokers.
â€“ Lower supply, more competitive apartment hunting, and more small-time mom & pop landlords are all conditions that favor professional real estate brokers.
â€“ Attempting to find an apartment without a broker will be increasingly more frustrating.
5.) Generic classified columns such as Craigslist and newspapers will be less relevant compared to richer, more locally specialized search engines.
â€“ We are shifting into a new paradigm for apartment searching, leveraging mobile apps, map-based searching, and social media.
â€“ Older search sources that only provide basic text filtering will no longer be sufficient.
â€“ Websites that can quickly discover the best-valued, highest quality apartments using highly localized data will become the norm.
(SPECIFIC TO NEW YORK)
6.) Incentives such as free rent and no-fee apartments will diminish.
â€“ As demand increases landlords no longer need to add renter incentives to acquire tenants.
7.) The brokerage industry will see more exclusive listings and fewer open listings, leading to more fragmentation and smaller brokerage firms.
â€“ Larger landlords are finding ways to market their own properties, so more of the rental supply will come from smaller landlords or individual investors.
â€“ Brokerages will demand exclusive listing agreements in order to help market these isolated properties.
8.) Newer 100% commission firms will plateau in growth, as open listings become more competitive and traditional firms learn to fight back.
â€“ Many new 100% commission firms spawned in the last two years, but few have good differentiating factors.
â€“ Traditional firms have increased their collective marketing spending and leveraging their brand value and bulk vendor discounts.