The Impact of Rent Concessions on Today's Market | Market Update with Martin Perdomo

Unlock the secrets to navigating the turbulent world of real estate with the latest Wealthy AF Podcast episode, where I break down December 2024's rent trends using Zillow's comprehensive data. Are rent prices cooling down, or is there more than meets the eye? Join me, Martin Perdomo, as I reveal dynamic shifts in metro areas across the U.S., with surprising rent drops in cities like Denver, Salt Lake City, and Austin, while Hartford, Cleveland, and Richmond report significant year-over-year increases. Whether you're an investor seizing opportunities or a renter planning your next move, these insights will equip you with the knowledge needed to make informed decisions.

Explore the staggering 40.6% rise in single-family home rents since the pandemic and the continued climb of multifamily rents by 26.2%. Hear firsthand which metro areas are leading this growth trend, and discover the market's hidden disruptor: rent concessions. Even with impressive rent numbers, these concessions, including free rent months, suggest a more nuanced market reality. As I share personal experiences and strategies for navigating this complex landscape, you'll gain essential knowledge to shape your financial strategies in today's real estate market.

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Transcript

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Speaker 1 0:43

Welcome to Wealthy AF , the podcast where we show you how to build wealth , level up and take charge of your financial future , because being broke was never the plan . I'm your host , martin Perdomo , the Elite Strategist , and I'm here to bring you real talk , powerful stories and actionable strategies in personal development , entrepreneurship and wealth building strategies . If you're ready to break out of the rat race , create lasting wealth and live life on your terms , you're in the right place . So let's get started , because your journey to being Wealthy AF begins right now . Hey everyone , welcome back to another episode of the Wealthy AF Podcast . Today we're diving into the latest rent trends , breaking down the numbers and what they mean for real estate investors , renters and the market as a whole . Here we're seeing the December 2024 trends . Right , this is from the latest zillow report that zillow put out and um , let's get right on into it . Overall rent trends . The typical asking rent in december , guys , was 1965 , down 0.2 percent month over month . While seeing a slight fluctuation in the past month , the overall trend still shows 3.4% increase from the last year . Since the pandemic began , rents have skyrocketed by you ready Drum roll please . 33.1% so , even though there's been some recent cooling . 31% so , even though there's been some recent cooling , rents are still up overall . So what does this mean ? This means if you bought real estate before the pandemic , your rents up by around 35% on average right across the country .

Speaker 1 2:39

Regional rent changes . Now , when we zoom in on metro areas , we see some interesting patterns . In December , rents dropped in 32 major metro areas on a monthly basis . For instance , denver saw 1.3% drop , salt Lake City negative 0.6% and Austin negative 0.5% 0.6% and Austin negative 0.5% . On the flip side , rents are still rising year over year in 47 of the 50 largest metro areas . The biggest annual increase came in Hartford , cleveland and Richmond , with Hartford leading the charge at ready 7.9% .

Speaker 1 3:27

Now let's talk about single family rent trends . Now let's take a look at those guys . The typical asking rent for a single family home was $2,174 in December of 2024 . Up 0.1% from the previous month . Since the start of the pandemic , single family rents have risen . Guys you ready for this ? 40.6% according to Zillow 40.6% . There's no wonder why affordability is just through the roof and off the charts . Year over year , single family rents are up 4.4% . So even last year rents went up 4.4 percent . So even last year rents went up 4.4 percent . That's nuts . The biggest monthly drop in single rents were in salt lake city at a negative 1.2 percent and boston at a negative 0.8 percent . But looking at the year-over-year numbers , we are strong growth , particularly in hartford , st lou Louis and Cleveland .

Speaker 1 4:28

Let's talk about multifamily rents , guys . For all of us investors out there , all of you investors out there , all of you renters out there , this is important , important data . For multifamily properties . A typical asking rent was $1,812 in December , down 0.3 percent month over month . Since the pandemic , multifamily rents have risen , risen 26.2 percent . However , rents are still up 2.4 percent year over year . The biggest monthly drop in multifamily rents were in ready guys 1.44% in Memphis and Denver negative 1.4% . But overall , rents rose in 42 of the 50 largest metro areas , with Hartford , cleveland and Providence seeing the largest year-over-year increases .

Speaker 1 5:28

Let's move into an ugly truth that's happening in the market and it's called rent concessions . This is one thing that's really hurting the market and it's like the silent killer , because we're seeing rents , we're seeing these numbers of rents look good , but when you give away a month of free rent and , by the way , I'm doing it right now because it's slow in some of my assets we're giving half of a month off . We're giving concessions . So when you look at what that does in reality to the 12-month cash flow , your rents are significantly lower because there's so much more inventory in some markets . It is really having an impact on the true , the true guys , the true cost of rent . One thing stood out this month is the increase in rental concessions . Nearly 41% of listings on Zillow offered some sort of concessions in December , up 2.3 percentage points from last month and significant 8.3 percentage points from last year . Notable metro areas are seeing the biggest increase in rent concessions include Houston , kansas City and Milwaukee .

Speaker 1 6:47

Rent affordability I just touched on that a little bit . When we talk about affordability , the median household income , right , would spend . The median household would spend 29.3% of their income on rent 29.3% of their income on rent in December , which is slightly higher than the last month . And , by the way , guys , this is nationwide numbers . According to Zillow , nationwide numbers in some markets is significantly higher than this . The most affordable metro areas for renters right now include Austin , minneapolis , st LA , where renters are spending upwards of 36 to 40% of their income just to pay rent .

Speaker 1 7:43

And what does this all mean for investors and renters , for real estate investors ? There's some key takeaways and areas where renters are failing , falling month over month . Right , and it may be a good time to revisit your pricing strategy , but remember , even with some sort of dips , rents are still trending upward year over year in most major markets , which could signal long-term growth potential . Meanwhile , for renters , the pressure of rising rents continues to be felt in some of the larger , more expensive markets , making affordability a key challenge for many . Like I said , this report says that 29% is what the average use of people spend on rent , but I know for a fact that in some markets it's upwards of 39 , 40% . In many markets Trending upward , rents are trending or still trending upward year over year in most major market , which could signal , like I said , long-term growth . So , whether you're a renter , an investor or just someone watching the market closely , these trends are essential to understanding where the rental market is headed in 2025 . That's your December 2023 rental market update , so stay tuned and we'll continue to keep you informed on the latest trends affecting the real estate world .

Speaker 1 9:17

Thanks for listening to this episode of the Wealthy AF and remember to like , share and drop us a positive comment , or even drop us a comment in the comments . Love to engage you Appreciate you Peace out . See you next time . Engage you Appreciate you , peace out . See you next time . The Wealthy AF mastermind and private community it's a space where driven entrepreneurs , investors and go-getters like you come together to share strategies , build connections and create lasting wealth . So if you're ready to stop dreaming and start doing , head over to WealthyAFai right now , fill out the form and let's get you plugged into the community that's turning big gold into big wins , because being broke , that's not the vibe . Let's get you wealthy af now .