Why Is the Housing & Rental Market so Competitive?
Your client just wants to find that new place to call home, but feels frustrated by the process with such limited choices available. Since the pandemic started, many homeowners decided to stay put, holding onto their properties while home prices continued to rise. At the same time, new house hunters began competing with each other for the few homes up for sale, driving prices up even more. With inventory remaining extremely low and demand so high, intense bidding wars became the norm and locked many people out of the market altogether.
Prior to 2022, the pandemic era’s low interest rates on mortgages drove demand even higher, and made the competition that much fiercer, with some homes selling for $100,000 over the asking price and some buyers foregoing home inspections altogether (a move we strongly discourage). Now, a strong seller’s market, low inventory, and the current climbing interest rates due to widespread inflation have combined to make homeownership seem like an impossible dream to would-be buyers.
As a result more and more people need to continue renting, whether by choice or not, and that situation results in a competitive rental market at a time when demand for residential rentals outpaces the rate of apartment building construction. So, the rental market, in many ways, mirrors the buy-sell market with its low supply, high demand climate. Thus, the overall housing shortage of both homes and apartments makes it challenging for both buyers and renters to find a place to live.
Top reasons for a competitive housing market:
The Consequences of a Tight Housing Market
According to the National Association of Realtors (NAR), this tight housing market sees properties sell within a week in most areas. This rapid turnaround is occurring at the same time as 43% of Millennials, the largest home buying generation, confront the realities of housing affordability, prompting many of them to find alternatives, such as renting, in the hope that the current hot seller’s market will cool down in the future.
Generation Z, currently the youngest home buying generation, represents 2% of home buyers according to NAR. Although, in many cases, Gen Z expresses greater interest in the renting lifestyle than previous generations, according to the National Apartment Association. Their preference for rentals comes from a desire for greater flexibility, convenience, and fewer financial barriers, such as a large down payment, in order to move into the property. Also, Gen Z will remain young for a while still, and it will take time before more of them feel the urge to settle down in more permanent digs. Regardless of whether Millennials or Gen Z decide to purchase or rent, both mortgages and rents are continuing to increase due to competition for all available housing options.
Tips on How to Help Your Clients Navigate a Competitive Market
Although the market is extremely competitive, making decisions based on the fear of missing out on an apartment or house can result in buyer’s remorse because buyers can get into a situation where they devote too much of their income toward housing, more than the recommended 30% per month.
Finding the right fit for a client’s needs within their budget will depend, in large part, on the quality of help you bring to the table as an industry professional. With such high competition, it’s your job as an apartment locator or a real estate agent to know the ins and outs of navigating the current market and helping your clients find the right solution for their next home.
How Leasing Agents Can Help Renters
- Find a match for your client’s preferences – A good leasing agent will customize the experience by finding out exactly what the client wants in their next apartment in order to locate the best fit possible. They’ll ask about preferred location, budget, and must-have amenities, such as high-speed internet, a security system, or an outdoor space.
- Tell clients about any available concessions – Because of the ongoing relationship that leasing agents maintain with various building managers, they will often find out about any unadvertised concessions. Buildings will sometimes offer these discounts under certain conditions, such as a tenant agreeing to a longer lease or renting a specific type of apartment.
- Save your clients time and energy – Calling, scheduling, and touring can take lots of time and effort to arrange. Acting as an advocate who will follow through on every client’s behalf makes a difference in the lives of apartment hunters. Apartment locators already know many buildings’ policies and can make the process go smoother. They can also contribute additional, hard-to-come-by insight without extensive research.
How Real Estate Agents Can Help Home Buyers
- Navigate the process with fewer problems – Buying a house, especially for a first-time home buyer, can be complicated and requires multiple disclosures. An agent who knows about appraisals, inspections, and all the necessary procedures, can ensure a successful transaction and deter unexpected surprises. In other words, don’t slack off in real estate school and stay up to date on your continuing education.
- Understanding the current market conditions – An agent who understands how the market is performing, and knows a good value versus an overpriced home, can give the buyer additional information they need to make the best decision. A professional who can delve deeper into what a particular property offers, including neighborhoods and school districts, can also help when the buyer resells their home in the future.
- Negotiating the price to get the best deal – Agents who have completed dozens of transactions know how to approach the negotiation process, including what to initially offer and what to counteroffer. They also know what contingencies to include for their buyer, such as whether they need to sell their existing home, or get loan approval before completing the purchase.
Join Our Team & Help Clients Overcome a Competitive Rental Market
If you are looking for a full-time career opportunity, helping people navigate the competitive rental market, consider applying to become an Apartment Locator, with six-figure earning potential. Or, if your preference is to work part-time, you can start as a Touring Agent. AptAmigo offers a supportive team ready to celebrate your success in real estate.
AptAmigo is proud to be an equal opportunity workplace and does not discriminate based on race, religious creed, color, national origin, ancestry, genetic information, physical or mental disability, medical condition, marital status, gender, age, sexual orientation, gender identity, veteran status, or any other characteristic protected by applicable law, in connection with any aspect of employment at AptAmigo.
Jennifer Schmidt is a freelance writer in Vancouver, Washington, who specializes in real estate topics.