Written by: Eric Davis
Landlords and Property Managers play a critical part in the rental housing economy. They oversee and manage their rentals to ensure that their renters get the best property for their money. To avoid the risk of investment failure, staying updated with the current rental statistics makes a huge difference. Demographics and economics are constantly changing, so it is a challenge to be always on top of the housing trends. After all, awareness is the key. Being alert and focusing on new advancements in the rental market will help you arrange your marketing plan and remain profitable at the same time.
As we continue to rise out of the pandemic, the continuously increasing rent is a good sign for both owners and investors; however, this will put some renters or occupants in a more challenging position. In a much broader view, landlords and tenants will be in a predicament because income loss will be due to nonpayment from the tenant and an ongoing no-eviction process on the landlord’s side. As the CARES Act says, property managers and landlords are restricted from filing evictions due to nonpayment of rent and charging late expenses or other charges associated with leasing. Although some landlords are exempted from this rule, it is still necessary to assess what entails this law to ensure your rental investments comply legally.
Below are some of the current rental statistics selected from reliable sources:
1. Average Credit Score
Landlords consider several factors before accepting a tenant. One of them is Credit report and credit score.
There’s no set FICO rating to lease an apartment or house; the approval guidelines will differ on the property area, landowner/property manager, and other aspects. Having a positive score supports tenants to qualify for their dream house or apartment. The United States has an average score of 638 based on research back in 2020. Visit Federal Trade Commissionn to get a free copy of your credit report and check your credit score to know more about your standing.
2. Increased Rent Over the Past Year
The aftermath of the pandemic caused rapid rent inflation; costs increased 16% midyear last year. You can see price surges pretty much in every city and state. It is also observed that tenants shell out more of their income for housing expenses.
3. Average screened candidates per rental have expanded.
The quantity of tenants in the U.S. is quickly expanding every single day. As per reports, thousands of new tenants are coming to the market consistently, or one new renter at regular intervals. Landowners screen a normal of two candidates each time they need to fill an empty property. Each day that property opens means income loss. Finding the right occupant can be an upsetting and time-delicate cycle, but tenant screening is vital for landlords, and renting out a property isn’t as easy as it sounds. In 1965, most individuals were prepared to lease their property, and this is continually rising until now.
4. Families that are renting homes are about 36.6%
The interest in investment properties is certainly not another thing, yet it has expanded by an impressive number over the most recent couple of years. Forty-three million families, including 9 million recently constructed properties, were leasing their homes by the end of 2016. As indicated by Pew/Policy Advice, the complete portion of the U.S. leasing market is almost 37%, the highest in over 50 years. The IRS detailed that over 10 million Americans earn cash from a rental pay consistently, projected to increase interest for investment properties.
5. Individual investors own 74.4% of rental properties.
Most rental properties – about seven in ten – are owned by individuals, who typically own just one or two properties or smaller multifamily buildings with 2-4 units instead of large apartment buildings owned by institutional investors, according to 2018 census data. According to IRS income-tax data, individuals own most rental properties, but only a small share of individuals own rental property, according to IRS income-tax data. Of the approximately 50 million rental housing units in the United States, around 41% of the rental units are owned by mom-and-pop landlords, also known as individual investor landlords.
6. In 66% of real estate markets, purchasing is more reasonable than leasing.
In a study of 10,000 mortgage holders and leaseholders from 20 of the biggest metros in the U.S., 45% of those residing in rental lodging said they regret not buying their own homes. Factors like insufficient money for the upfront installment are the full explanation. The study shows that almost half of the respondents were residing on lease and didn’t have the financial strength to purchase a home or realize their homeownership dream. It was principally a direct result of high homeownership and home loan rates, making it very difficult for individuals to possess their own homes. Whether or not leasing is preferable to purchasing a home relies upon the household’s stability. Considering late rental details, families can consider leasing important for a time of change.
7. Criminal hit rate
While it might appear to be a standard screening strategy, 16% of property managers never run criminal history verifications on their tenants. Property managers will generally overlook misdeeds following two years have passed. Rules and regulations were set by The U.S. Department of Housing and Urban Development (HUD) to look at property managers and tenants before ending the arrangement and simultaneously avoid future dangers. Moreover, the City of Seattle is considering a proposal to make it unlawful for lodging suppliers to victimize tenants based on capture or conviction record history. For more information, see Seattle Human Rights Commission’s Proposed Ordinance to End Arrest/Conviction Record Discrimination.
8. More tenant income going toward paying the lease
In the initial ten months of 2021, the public middle lease has expanded by a surprising pace of 16.4%. It is over the 30% limit at which an individual is named “housing cost-burdened.” Rents just hit another record-breaking high, implying Americans are spending greater paychecks considerably on lodging. As indicated by Pew’s overview, 34% of lower-income adults now say they were stressed to some extent pretty much consistently about paying their lease or home loan. According to the whole U.S. population, analysts express that around one-in-five grown-ups frequently stress over lodging moderateness. Contingent upon where you reside in Washington, rents are on the ascent. Rental costs aren’t slowing down yet, but you can bring down your expenses by leasing slow times of the year, which is, for the most part, the colder time of year.
The world of landlords is continuously evolving. Economic conditions influence the success of landlords and the general public’s interest in becoming homeowners or remaining renters. The statistics above show some of the most intriguing tidbits about the landlord landscape. Davis Property Management representatives acknowledge our responsibility to ensure our shared success by practicing and promoting the highest ethical standards. Call us now at 425-658-7471 or send us an email at [email protected].
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