As we near the end of November, the usual seasonal slowdown has begun in the local rental market. You may have noticed that it started slowing a bit earlier this year, and that’s due to a number of factors. From inflation to the elections, people have been choosing to remain still. The holidays are coming and the colder weather is creeping in. Tenants are wondering what things will look like politically and economically as this year comes to a close and a new one begins.
Let’s take a look at the factors we believe are contributing to this rental market slowdown, and how rental property owners can avoid longer vacancy times, which we know are expensive and unpleasant.
Inflation and Economics: Why the Rental Market Has Slowed
Everything seems to cost more than it once did. Tenants are especially feeling the pinch of inflation, and so they’re choosing not to move if they don’t have to. That’s turning out to be a positive for retention numbers. If you already have great residents in place, it’s easier now to keep them. They won’t be willing to look around for a new home and pay potentially higher rents.
There’s also the drop in interest rates that is potentially moving a lot of renters into the sales market. They might be worried about the economy, but they see buying a home as a better investment than continuing to rent.
Housing costs are still high, even as inflation begins to ease.
Seasonal Factors in a Rental Market Slowdown
A lot of residents will take a wait-and-see approach when there’s a major election happening in the U.S. Since our presidential election earlier this month and the outcomes it produced, we’re seeing more people remain where they are.
Weather is a factor, too. Colder temperatures tend to freeze people into place. Even if they don’t love where they live, the idea of moving during the winter does not appeal to a lot of tenants or potential tenants. Families with school-aged children will be less likely to move in the middle of the school year. People with holiday plans will not want to invite the stress of finding a new home into the already stressful season.
Avoiding Longer Vacancy Times
With the rental market slowing down, you’ll want to avoid a vacancy. Focus on tenant retention so you can be sure that your existing residents aren’t making plans to leave. If you currently have a home for rent and you’re nervous about how long it might take you to find a qualified renter, here’s what we recommend as your expert property management resource:
- Provide a Property Tenants Can’t Wait to Rent
Outdo the competition. Provide an outstanding rental property that well qualified tenants will want to rent. Your property has to stand out, and you can make sure it does well with good maintenance policies, upgrades and updates, and fantastic curb appeal. Look for ways to include added value. Maybe throw in landscaping services with the rent. Offer valet trash collection.
- Price Your Property Competitively
The slowdown in the market means you may have to be more competitive with your pricing. You don’t want to undervalue your home or leave any potential rental money on the table. But, you have to pay attention to the market and make sure you understand what tenants in this area are willing to pay. Overpriced homes contribute to longer vacancies, especially now.
- Offer Incentives
Consider providing something that tenants won’t find elsewhere. Maybe you can include internet services for the first six months of the tenancy. Consider a flexible lease term, allowing for a nine-month lease or an 18-month lease instead of the traditional one-year lease agreement. Do tenants want to move in their own washer and dryer? Or paint the walls in their preferred colors? Let them. This is the type of market that requires creativity and flexibility in attracting great tenants and avoiding long vacancies.
- Consider Allowing Pets
Pets can be a problem, especially if you feel strongly about your floors and walls. However, longer vacancies can often be attributed to a no-pet policy. More than half the local tenant pool has at least one pet. If you don’t allow them, you’re eliminating a large chunk of potential renters and therefore extending an already long vacancy. You don’t have to allow every imaginable pet. Put a sensible pet policy in place and make sure your marketing reflects that you’re willing to consider well-behaved pets. You’ll get more interest in your property and your vacancy period will be shorter.
Focus on Tenant Retention
As we mentioned, tenant retention is more important than ever, in a market that’s slowing down to a near-stop. The best way to avoid vacancy is by holding onto the tenants you currently have in place. Provide a great rental experience by remaining responsive and accessible. Communicate with your residents. Make sure they have all the conveniences they need, including online rental payments and access to good maintenance services.
Provide a good and positive rental experience for your tenants, and they’ll stay in place longer. Tenant turnovers are expensive; they leave you with a vacancy and it costs money to clean and update your home before a new tenant moves in. And with the way things stand now, it’s hard to know when those new tenants might move in at all.
This does not have to be as dire as it might seem. While vacancy times are longer, and tenants are fewer than they tend to be during the spring and summer months, it’s still possible to rent your home out. Working with a property management partner can help. We know the market well, we know what tenants are looking for, and we understand how to reach potential renters, even in a time where economics, inflation, and weather are driving most of their decisions.
We’re your first and strongest line of defense against vacancy and turnover.
Let’s talk about it.
Please contact us at Real Estate Gladiators. We serve Monroe, Issaquah, Bellevue, Everett, Lake Stevens, Kirkland, and other cities in and around King and Snohomish counties in Washington State.
