Yes, there are some locales that might be an exception. But, nationwide, the applicants-without-effort party has been over for some time.
By now, most everybody knows that, so we’re not claiming to break new ground here. But we’re going to show you the details of what’s going on, what comes next, and how you should respond.
We’ll start with what’s going on by walking through three rather gloomy looking charts.
Market Times Reach All-Time Highs
As you can see in the graph below, December 2023 market times were 12% longer than December 2022 and 47% longer than December 2021. In fact, for as far back as our data goes (2017), December 2023 had the highest on-market times.
And December 2023 isn’t an outlier. Starting in June of 2023, on-market times have remained historically high.
Leads Per On-Market Period Are Near Historic Lows
If you look closely at this next chart, you’ll notice that December 2019 had a lower number of leads per on-market period than December 2023.
But don’t get your hopes up for a silver lining.
There’s a reason the 2019 numbers may be skewed low and 2023 may be skewed high. Back in 2019, many of the big listing sites pulled back on distributing free leads. But in mid-2023, Zillow Brought Back Free Listings and its sites started to again distribute free leads.
Without this skewing of the data, there’s a decent chance December 2023 takes the cake for the worst number of leads per on-market period (at least since 2017).
Rising Rent Reductions
This one’s especially concerning: There have been a higher ratio of rent reductions for every month in 2023 than there were in any month of any previous year. Notice the red line in the chart below.
Our read on this is that owners and managers are still playing catch up and trying to figure out what their rent needs to be. But we’re cautiously optimistic that as these reductions stabilize, we’ll have hit the bottom of this market.
Winter Is Here to Stay
The unfortunate reality is we don’t see this market changing significantly for the next nine months. Summer will obviously have a seasonal shift toward lower market times, but we don’t expect an actual recovery. That’s because the underlying fundamentals aren’t going to change in any drastic way.
Pandemic stimulus is through the system and long gone. Household debt is back at Historically High Levels. Interest rates are the highest they’ve been in More Than Two Decades. Student loan repayments Have Restarted.
To top it off, short-term rentals and second homes are being converted to long-term rentals.
So what’s a property manager to do?
Leasing Skills and Best Practices Matter More than Ever
The guidance here is all about leasing. Using your leasing skills, leveraging automation, and implementing best practices is what’s going to get you through this tough rental market.
That includes solid marketing content that attracts renters, instant replies to every inquiry, and prospect nurturing that converts renters to signed leases. ShowMojo can help with all of that.