Leads, Rents, and Market Times: Is the Rental Market Finally Steadying?
Market times, leads per on-market period, and rent reductions are still headed in the wrong direction.
But unlike our last half dozen market updates, there’s reason to be hopeful.
The rate of the drop in leads per on-market period in Q1, Q2, Q3, and Q4 has slowed significantly, as has the rate of rent reductions.
And anecdotally, we’re hearing cautious optimism among property owners and managers.
Let’s get into the numbers.
The Gap is Shrinking in Leads Per On-Market Period
In the latest quarter, we saw a notable shift in the trend for leads per on-market period. While leads are still at historically low levels, the year-over-year decline has slowed compared to previous quarters.
In December, leads per on-market period were down 9% from 2023 and 14% from 2022.
Now that doesn’t sound good. But it looks a lot better than Q2, Q3, and Q4, during which the average number of leads per on-market period was down 22% compared to 2022.
So at least we can say the drop is slowing.
Rent Reductions Flatten
Rent reductions just barely increased by 1% in December 2024 compared to December ‘23. And they were 6% more frequent than in December 2022.
But zooming out, it seems clear that we’re turning the corner on rent reductions. Consider that in March, May, and August of this year, rent reductions had increased by 47, 63, and 37% respectively compared to the same months in 2022.
By contrast, in December ‘24, the increase in rent reductions compared to December ‘22 was just 6%.
The plateau in rent reductions suggests optimism amongst property managers. Instead of aggressively lowering rents now, landlords may be anticipating a market rebound and holding out for stronger demand.
Market Times Extend Their Streak of Futility
Unfortunately, there’s no silver lining in the data for market times.
Compared to the past two years, this December’s market times were significantly longer: 9% longer than in December 2023, and 22% longer than in December 2022.
That tracks with what we’ve been seeing over the past several quarters.
This extends the dubious streak of historically high market times that emerged in June 2023.
Cats and Dogs Continue Their Take Over
Dog and cat ownership has been On the Rise for Years. And the trend toward pet-friendly listings shows no signs of slowing down.
From Q4 2023 to 2024, the number of on-market listings allowing dogs or cats increased by about 3%.
This follows the broader trend we observed from 2022 to 2023 and suggests property managers may be adjusting their policies to meet market demand.
Property Managers Continue Opting Out of Pre-Showing Screening Questions
From 2023 to 2024 the portion of on-market listings without screening questions rose by 12%, and rose by 89% from 2022 to 2024.
While the overall numbers remain small, the significant percentage increase suggests that property managers are trying to reduce friction for prospective renters to minimize market times.
Note: This data does not account for identity verification processes.
Takeaway? Headwinds are Easing
In addition to the slowdown in rent reductions and easing declines in leads per on-market period, we have reason to believe that market headwinds are easing.
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- Rate hikes on pause. Rate cuts are on the horizon: After cutting rates at three consecutive meetings in 2024, the Federal Reserve held interest rates steady at its January 2025 meeting. And it is projecting Two Rate Cuts in 2025.
- Increased adoption of Leasing Automation: An increasing number of property managers are pressing their technological advantage, allowing them to improve efficiency, even in a tough market.
- Upswings in Leading Indicators: We expect leading indicators to show slight upswings as inflation and cost of living Continue to Stabilize.
- Price Fixing Purge: Rents should become more attractive as the lawsuits and Investigations Into the Biggest PM Companies continue to progress.
New Stuff: Urban, Suburban, Rural and Price-tier Splits
Historically, rural, suburban, and urban units all tend to have similar market times. But when Covid hit that changed in a big way. Suburban and rural units started leasing 10 days faster than urban units.
But since the beginning of 2023, those splits have snapped back to normalcy.
Another urban, rural, and suburban split worth looking at is the difference in lead volume based on unit type.
As you can see, urban units tend to have a higher volume of leads per leasing period compared to suburban and rural units. And suburban units have a higher volume compared to rural units.
This makes sense considering the greater the population density, the higher the number of leads.
Our last chart might be a head-scratcher at first glance. It shows that the higher your rent, the faster your unit gets leased.
But before you start hiking prices, consider this. Higher prices imply higher demand. And higher demand implies a more robust rental market.
So it’s much more likely that higher-priced units rent faster because they’re in highly desirable markets. Not because the higher price in itself caused the unit to rent faster.
Sorry to burst your bubble.
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