Last modified on August 1st, 2022
By Brittany Benz
Global events over the past few years simultaneously influenced an economic recession and a booming housing market. These unique market conditions have had major implications for the property management industry. To stay successful and prepare your business for what’s next, you need to understand how and why the property management industry is shifting. Here are the top five property management trends that are impacting the market today:
1.) Labor shortages make it difficult to find and retain team members
Property management has historically had a fairly high turnover rate compared to other industries. Being a property manager is a demanding job, and many businesses require their employees to work weekends to accommodate prospective renters in apartment tours and be on-call after hours for maintenance emergencies.
When unemployment was higher, property management employees were more willing to comply with these requests and carry out tedious manual tasks like data entry. But with the current labor shortage, today’s workers are expecting more in exchange for their service, fueling what is called the “Great Resignation.” Businesses are experiencing this pain, too. According to a study by AppFolio and the National Apartment Association, HR, staffing, and recruiting is by far the most urgent challenge for property managers today.
To attract and retain top talent in a tight labor market, property management employers need to rethink what they can offer their teams and how they can make work less manual and more meaningful. In addition to offering more competitive wages and benefits, employers should make sure their teams have the tools to streamline and automate their workload. The easier it is to track service requests, process payments, deposit refunds, and manage renewals, the happier your team will be. Employers can also invest in cultivating a supportive company culture and creating more flexibility in their employees’ working hours to minimize employee turnover.
2.) Rising home costs prevent renters from becoming homeowners
As of 2022, even the youngest millennials have reached home-buying age. But that doesn’t mean they’re in a position to buy a home. Rising home costs, inflation, and debts are making it increasingly difficult for would-be homeowners. Consider the following:
- By May 2022, the median home sales price in the U.S. was $430,621, up 14.8% from May 2021.
- The Bureau of Labor Statistics reports that consumer prices increased by 8.6% from May 2021 to May 2022. To make matters worse, the Fed increased mortgage interest rates to combat this inflation, which further reduced this generation’s buying power.
- Every year since 2005, the average graduate has left college with more than $20,000 in student loan debt. By 2020, the average student loan debt was up to $30,000. The monthly payments on these debts are eating into funds that could otherwise be saved for a down payment.
- In a 2022 Redfin survey, 38% of respondents reported not having a high enough income to set aside savings to buy a home.
This all leads to an inevitable result: Millennials continue to rent long after reaching the age at which previous generations purchased homes. And this fact brings us to the next trend.
3.) Build-to-rent single-family homes are on the rise
Generally speaking, millennials want to buy homes. As CNBC reports, 65% of millennials identified homeownership as a top sign of success. But for some of the reasons we’ve just discussed, this is not financially feasible for most millennials. So what’s the next best thing? Renting a single-family home.
Build-to-rent communities have gained traction as homeownership has gotten further out of reach for upcoming generations. These communities allow residents to experience the lifestyle a single-family home offers — more space than most apartments, fewer restrictions than apartment living, improved privacy, and even a small yard — without the large down payment or long-term financial commitment of buying.
Around $40 billion is expected to be invested in build-to-rent single-family homes over the next 18 months. Additionally, construction has more than doubled year-over-year in 2022 for build-to-rent single-family homes, and Phoenix, Dallas, and Columbus are the three biggest markets. So if you currently manage single-family rental homes or are thinking about getting into the market, then it’s a good time to start networking and marketing your business to build-to-rent community owners and developers.
4.) Renter migration continues to impact occupancy rates
COVID-19 triggered a mass migration as remote work proved to be a viable long-term arrangement for many workers. An incredible 70% of renters say they will continue to work remotely. And this opens a whole new world of living locations.
Workers on a hybrid schedule who only need to commute to the office one or two days per week are now comfortable living further away from the office. And workers who are fully remote have the option to move almost anywhere. Renters are now moving to new cities, crossing state lines, and even going international. Without needing to be near the office, workers are free to move based on personal preferences like family proximity, weather, affordability, and lifestyle opportunities.
In December 2021, 82% of renters said they planned to move in 2022. And with the summer moving season upon us, certain markets are seeing increased renter demand, while others are seeing higher vacancy losses.
According to a Forbes report, affordable Sunbelt states, like Arizona, Texas, and Florida, are seeing an influx of new residents, while states with high costs of living, like California and New York, are losing residents. Of course, real estate is highly localized, so there are still plenty of hot markets on the coasts, just as there are still cool markets in the Sunbelt.
If you’re in a growing market, cater to out-of-state renters by providing virtual showings and online applications. And if you’re in a cooling market, pay close attention to our final property management trend.
5.) Resident amenities are taking priority
With more renters working from home, residents are placing a greater priority on lifestyle amenities. In a recent NMHC/Grace Hill study of renter preferences, 29% of renters reported that they plan to relocate to a rental community with better amenities when their leases expire.
What amenities are renters looking for? According to the same study:
- 92% of renters are interested in an in-unit washer/dryer
- 91% are interested in air conditioning
- 90% are interested in soundproof walls
- 89% are interested in high-speed Internet
Not only do these amenities attract new residents, improve satisfaction, and increase retention, but they also command higher rental premiums. Along with the amenities listed above, renters want digital experiences, such as online rental payments, online renewals, and the ability to text or email their property management business when they have a question. These tools are convenient for renters and ultimately save time for your team. For more ideas on how to improve your resident experience, take a look at this article.
Keep your property management company competitive in 2022 and beyond
Here are some actionable steps you can take to directly address the five trends we’ve discussed:
- Attract and retain professional talent by offering competitive wages, benefits, flexibility, and a supportive company culture.
- Recognize that today’s renters are skewing older as homeownership becomes less affordable. Rentals aren’t just for those in their 20s anymore, so you may need to shift your marketing and messaging to reach older millennials.
- Consider investing in build-to-rent single-family homes, which are in high demand by more mature renters.
- Understand the current migration patterns so you’ll be in a position to capitalize on them.
- Provide amenities and digital services that meet the needs of today’s residents. This means in-unit washers and dryers, air conditioning, high-speed Internet connections, online rent payments, and online renewals.
By embracing these emerging trends now, pivoting your business strategies, and adopting the latest technology, you’ll be better able to attract great talent, serve your residents, and gain a head-start over your competitors.
Comments by Brittany Benz