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

Transcript

Speaker 1: 0:01

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: 1:57

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: 2:44

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: 3:46

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: 4:45

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: 6:04

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: 7:00

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: 8:34

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