How to Tune Into Buyer Trends
Things are always changing, especially in the real estate market for a rental property. With fluctuations in the economy due to the novel coronavirus (COVID-19) and a national health emergency, and nationwide protests and political unrest, the real estate market in specific needs to keep up with buyer trends.
At Renovo Financial, we’ve been able to identify five rental property trends happening, even with everything going on in the world.
The Typical Renter is Changing
Millennials are the majority renters, with a small fraction being home buyers, and what they’re doing differently than the Generation X is they’re not buying homes at the same age as their parents were. Millennials typically want to travel for opportunities and are less likely to continue putting down roots in the same town as their parents and grandparents. Millennials are also at a disadvantage where, even if they want to buy a home, they can’t afford to.
Soon, the generation after Millennials, Generation Z, will be looking at rental properties, and real estate investors need to adjust to the short attention span and technological upbringing of this generation.
The Use of Technology is Growing
COVID-19 really put pressure on advancing technology, which, even after COVID passes, will continue to grow. Virtual technology is becoming more and more relevant with digital walkthroughs and video meetings. Landlords will need to embrace the new technology - especially when their target demographic is the tech-savvy generations, Millennials and Gen Z.
Rent Prices are Still Rising...
Although most real estate investors and rental property owners have opted not to increase rent during the global pandemic, specific markets - specifically Portland, Louisville, and Fresno - saw an increase in rent prices.
Traditionally, the price of rent will go up in the warmer months of spring and summer, but that has not been the trend this year.
… But the Demand for Rental Property Does, Too
Even when the economy was doing well before COVD-19, the rental property market wasn’t losing renters to homeownership. With unemployment claims hitting a record high, the demand for rental property is continuing to increase. Supply, on the other hand, continues to be short. This demand is one major reason that even through a pandemic, prices for rentals haven’t been drastically affected.
Airbnb Can Change the Market - Again
One of the most affected areas of the real estate market, when the tourism industry took a hit, is Airbnb rentals. The Airbnb hosts can’t rely on rentals as their primary source of income, so they have three options:
- Continue listing their rental property, even though they are unlikely to receive bookings
- Utilize Airbnb Online Experiences
- Transition into long-term rental property investment, and forgo Airbnb as an investment strategy
For the hosts who opted not to shift to Airbnb’s Online Experience, and are instead choosing to move towards long-term rental property investment, this is disrupting the rental market, driving rates down even when the demand is high.
When you’re ready to look into investment opportunities in a rental property, contact Renovo and talk to one of our team members to discuss how you can continue to grow your rental investment portfolio in the midst of a changing market.