Rental Market Will Slow Through 2023: The Kiplinger Letter
Expected growth in the rental market is likely to remain slow for the rest of the year amid a slow housing market and cooling economy.
To help you understand what is going on in the rental and housing markets and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…
Expect growth in the rental market to keep slowing for the rest of the year after increasing just 0.3% nationally in the third quarter. Effective rents were up only 0.1%. The gap between asking and effective rents has widened, showing that some landlords are offering more free rent to entice new tenants.
Even so, rent growth is likely to be weak in the Sun Belt metro areas, which saw the fastest rising rent rates in 2021 and the first half of 2022. Now, the region has the largest imbalance of supply and demand, with record numbers of new units up for lease but too few renters. Rent growth should be stronger in Northeast and Midwest cities, particularly Jersey City (New Jersey), Cincinnati, Milwaukee, Chicago, Boston and Kansas City metro.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Apartment vacancy rates will edge up by the end of the year. Vacancies fell nationally by 5% in the third quarter, up 0.% from a year ago. The vacancy rate has risen steadily since the middle of last year, as supply now outweighs demand. Meanwhile, an influx of new apartments is hitting the market, as completions are set to rise sharply over the next year. Relatively low vacancy rates and rising rents pushed developers to move forward with multi-family projects over the past few years.
It’s possible that developers could delay some projects amid softer market conditions and take stock of the slowdown in remodeling projects. Increased prices and higher interest rates are leading homeowners to spend less. Larger projects are seeing a particular pullback, but spending on smaller jobs is slowing, too.
Similarly, the impact of higher interest rates on remodeling has been muted so far because most homeowners were still relying on savings rather than financing the project. Spending on remodeling is on track to grow around 3% this year, a far cry from the 16.3% increase in 2022. Sluggish home sales are a big reason, as remodeling and repair activity typically ramp up as owners prepare for a sale.
There are two reasons for further declines next year: a slow housing market and a cooling economy. Homeowners are likely to pull back on high-end projects and focus on necessary replacements and smaller projects. However, spending on energy-efficient retrofits may be strong in 2024 because of federal incentives.
This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.
Related Content
To continue reading this article
please register for free
This is different from signing in to your print subscription
Why am I seeing this? Find out more here
Rodrigo Sermeño covers the financial services, housing, small business, and cryptocurrency industries for The Kiplinger Letter. Before joining Kiplinger in 2014, he worked for several think tanks and non-profit organizations in Washington, D.C., including the New America Foundation, the Streit Council, and the Arca Foundation. Rodrigo graduated from George Mason University with a bachelor's degree in international affairs. He also holds a master's in public policy from George Mason University's Schar School of Policy and Government.
-
Earn Delta SkyMiles Worth Up to $1,800 with an AMEX Business Card
Delta SkyMiles and American Express offer 150,000 on business credit card for new cardholders.
By Ellen Kennedy Published
-
Stock Market Today: Markets Soar Amid Strong Earnings for Big Tech
Equities ended the week on an up note thanks to some of the market's biggest names.
By Dan Burrows Published
-
Knowing How to Compute Tax Basis in Your Home Can Save You Money
The Tax Letter Whether you're selling or buying a home, you'll want to know how to compute tax basis. It could save you on taxes when you sell.
By Joy Taylor Published
-
A Spotlight on the Pacific States: The Kiplinger Letter
The Kiplinger Letter Most Pacific states are seeing good job growth in multiple sectors including tourism, hospitality, and construction.
By David Payne Published
-
The Robots Are Coming... But Not For a While
The Kiplinger Letter There’s excitement in the tech sector over the potential of humanoid robots, but widespread adoption is likely to be years away.
By John Miley Published
-
Farmers Face Another Tough Year As Costs Continue to Climb: The Kiplinger Letter
The Kiplinger Letter Farm income is expected to decline for a second year, while costs continue to up-end farm profitability.
By Matthew Housiaux Published
-
A Spotlight on the Mountain States: The Kiplinger Letter
The Kiplinger Letter Most Mountain states are seeing good job growth in multiple sectors from healthcare, energy, and semiconductor production to farming and government.
By David Payne Last updated
-
A Spotlight on the Plains States: The Kiplinger Letter
The Kiplinger Letter The labor market is tight in the Plains states and outside of healthcare and construction most sectors are flat or down.
By David Payne Published
-
Kiplinger's Commodities Forecast
The Kiplinger Letter Following a rocky few years for markets, we expect commodities to be less volatile in 2024, as a post-pandemic normal finally emerges.
By Matthew Housiaux Published
-
Growth Stalls in China As Property Market Continues to Struggle: The Kiplinger Letter
The Kiplinger Letter The property market remains a major drag on Chinese growth, with sales now 50% below their peak.
By Rodrigo Sermeño Published