Prepare for these 3 Top Rental Trends in 2024

1: Stabilized, Slowing Rent Growth

The first trend of 2024 started in mid-to-late 2023 and is expected to continue for some time: after the past few years of run-away rent costs, there are signs the market’s finally beginning to cool.

According to The October Rent Report on Rent.com, the average national rent has gone up roughly 20% in the last three years. However, the report also mentions that while rents remain high overall, monthly rental fees have begun to stabilize. Costs are rising less quickly and, in many areas, even dropping into more predictable patterns.

This slowing growth impacts both landlords and renters. With more predictable rates, renters may feel more comfortable moving out, rather than staying put. With more renters searching for places, you, as a landlord, may have a better pool of rental applicants to choose from. However, that also means you need to know what to look for in a good tenant.

How to Prepare

• Know how to set a fair market rent. With prices fluctuating (and some even going down), it’s important to know the market in your area. If the price is too high, you may find yourself with costly vacancies.
• Run thorough renter screening. With more movement in the rental market, it’s easier for potential rental scams to slip through the cracks unnoticed. Having data to backup your gut feeling can help you make better rental decisions. Some common screening reports include:
  • Eviction check: check for previous eviction-related records, so you can better understand your applicant’s rental history.
  • Criminal record check: help discover if your potential tenant has a relevant criminal history.
  • Credit check: help assess your applicant’s fiscal responsibility with a look into their financial track record.

2: Climate Concerns Impact Rental Decisions

The second trend to look out for in 2024 is a global shift: renters, property managers, and insurance companies are starting to pay closer attention to climate change in rental-related decision making.

According to the National Center for Environmental Information, the number of billion dollar climate emergencies has steadily increased each year since 1980. According to the data, the instances of climate-related emergencies, their intensity, and the cost to rebuild are continuing to rise. Now, those who are stuck with the repair bill are taking notice.

A study from Berkeley Haas School of Business shows that, while localized heat shock (high temperature) does not necessarily impact rental prices in an area, sustained heat shock leads to ”a significant decrease” in the house prices in an area. This means as temperatures rise in an area, the property values drop.

While falling property values could create opportunities to snatch up a good deal, it’s also cause for vigilance. After all, it’s no use buying a cheap rental property if renters are moving away and you can’t even get insurance.

In fact, a recent Washington Post article shared how many major insurers are cutting protection due to extreme weather in some disaster prone areas, including those impacted by hurricanes, wildfires, flooding, and other natural disasters.

How to Prepare

Here are a few things you can do to help prepare for how climate-related incidents might impact your property management business:

• Pay attention to trends in your area. Be aware of how potential renters and other property managers behave in your local market. Are many people selling Are homeowners or renters moving away Knowing how your local market behaves can help you find good opportunities.
• Check with insurers before purchasing a property, especially in disaster-prone areas. Make sure to know if insurers provide the complete coverage you need, including climate change-related incidents.
• Consider making all tenants carry renter’s insurance. A good practice anywhere, requiring tenants to carry renter’s insurance may help protect you against losses in the case of natural disasters, among other benefits.

3: Uncertainty in Home Values and Prices

While rental markets are stabilizing, there’s some lingering volatility in the housing market that will likely continue through 2024. Now that the period of skyrocketing home prices has cooled off, experts are split about what will happen next.

Some industry experts, like Zillow, predict a 4.9% increase in home values by August 2024.

Their prediction is based mostly on low inventory and high interest rates. This could mean good news for homeowners and landlords looking to increase rental costs, but not so great news for independent landlords looking to add another property to their portfolio.

On the opposite side, Newsweek reports that a significant drop in home values is predicted by Morgan Stanley. Morgan Stanley’s predictions are based on favorable interest rates and increased inventory. If this happens, you may be able to pick-up a new property for a better bargain. However, it may also mean renters are also taking the opportunity to buy, which could mean fewer renters in your area.

How to Prepare

What might happen to home prices is anyone’s guess. Here are some things you can do as a landlord to help prepare for this uncertainty:

• Know how to price fair market rent in a high-inflation environment. If inflation does jump up again, it’s helpful to know how to price your rent accordingly.
• Pay attention to your own mortgage. According to financial site NerdWallet, the Federal Reserve’s changing interest rates can sometimes impact your existing mortgage payment. Changes in what you owe for your mortgage might change your rental strategy down the line.

What Happens After You Terminate a Lease Early

If a tenant violates the terms of the lease or you want to terminate the lease early, there are a few things that might happen. Once you provide a lease termination notice, the tenants can react in a few different ways:

• Accept your terms and make necessary changes by the deadline
• Decide not to meet your demands and move-out
• Ignore the notice and stay (potentially becoming a squatter)
• Actively contest the lease termination and take legal action against you

Even though the outcome may make you frustrated or angry, it's very important to remain professional and always do things by the book. Maintain effective, level-headed communication with tenants and keep good records. After the lease is terminated, you can work on eviction proceedings, if needed. Depending on the outcome, you may need legal counsel for additional assistance.

Prepare for 2024 with Fast, Efficient Tenant Screening with SmartMove

The road ahead may be lined with uncertainty, but the journey doesn’t have to be scary. Help bring confidence to the coming year with ultra-fast, affordable tenant screening through SmartMove.

A stabilizing rental market could mean more renter movement, which means it’s on you to be extra-vigilant about who you’re letting in your property. Eviction checks help you learn about past eviction-related judgments, notices, and detainers that may be tied to your rental applicant. Meanwhile, criminal record reports search millions of federal and state-level crime records, offering insights into potentially relevant history that you need to know about.

Amidst fluctuating prices, it’s essential to know your renter will pay the rent on time, in full, and every month. A renter credit check helps you learn more about their financial history, while Income Insights helps you confirm your applicant earns what they say they do. Exclusive to SmartMove and included in every report, a proprietary ResidentScore even helps you predict evictions 15% better than traditional credit scores.

All lightning-fast reports that are backed by TransUnion, a major credit agency with nearly 40 years of data expertise. With built-in consent and on-demand functionality, you can get same-day reports with no hidden fees, no subscriptions, and no hassle. Simply sign-up, screen, and pay only for what you need and only when you need it.

Help find great tenants in 2024 with easy, efficient tenant screening through SmartMove.

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