Signing a new lease is an exciting step in life. Your signature marks a transition into an exciting opportunity, one full of possibility and promise. But too often, a move to a new city can include difficulties like barren apartments and impenetrable social environments. Luckily, 2023 is the year all that could change for renters and the housing market in general.
No longer is renting your apartment a discouraging and difficult endeavor. Will rent go down in 2023? Would you be able to pay for affordable housing? According to the Federal Reserve Bank, average rent growth in 2023 is estimated to be 8.4%. In the rental market forecast 2023 has ushered in, young professionals may find renting opportunities in the housing market with more social atmospheres, buildings with mixed-use purposes, and greater ease of transactions.
As cities slowly become a renter’s paradise, here are five rental trends you need to know before you sign your next lease.
#1 The Average Age of Renters is Increasing
Renting is no longer just for the young. Although the typical portrait of a renter is someone fresh from college, looking to live a little before they settle down, the statistics are starting to change. The current rental market is broken down as:1
- Millennials – Millennials are still the leading renters, making up 45% of rental applications.
- Gen Z – About 27% of rental applications are coming from the up-and-coming Zoomers.
- Gen X – Gen Xers make up a sizable 18% of renters in the U.S.
- Baby Boomers – Although they’re still the smallest slice of the rental pie, renting is an increasingly popular option for Baby Boomers. They currently make up 10% of the rental market.
What is the normal rent increase? As the average age increases and there’s more diversity of age amongst renters, tenants may find apartments offering greater convenience. That could include anything from more elevators in buildings to intergenerational family services included in your rent.
#2 Buildings Are Offering Diversified Spaces
While some workers are headed back to the office, remote work has become the new normal for many people2—and remote-working renters are eager for homes with spaces that can serve multiple functions. More landlords are more likely to offer homes that can meet multiple lifestyle needs, with features like:
- Coworking or office spaces
- Shared lounges and meeting rooms
- Outdoor spaces like patios or finished roofs
- In-building gyms or saunas
Renters may find themselves enticed into a new lease that includes an unprecedented slew of features to accommodate their hybrid lifestyle. In addition, shared coworking spaces in apartment buildings could be an advantage for those who feel isolated in remote work environments. In 2023, your office and your new coworkers could be right down the hallway.
#3 Mortgage Interest Rates Are Rising
People who were thinking about purchasing a home in 2023 may find that renting remains a more attractive option instead. The main reason for this? Mortgage interest rates are predicted to continue to rise this year.3
In 2022, federal interest rates increased four times.3 They now sit at just above 7%. And the Nasdaq predicts that the rates could fly as high as 9% before the end of 2023.
This increase is largely due to increased economic volatility leftover by the pandemic. And while interest rates will likely eventually even out as we enter a recession, future homeowners may wish to continue saving up for another year before they start a mortgage.
#4 The Demand for Mixed-Use Properties is Growing
One of the rental market predictions 2023 may bring to life is a change in how rental buildings themselves are used. It’s estimated that 83% of the U.S. population now lives in urban areas.4 But as this population grows, the actual physical space of cities can’t grow with it. With this increase in demand for rental property, there is also an increase in “mixed-use properties” in most cities across the country.5
Mixed-use properties are those buildings with living spaces on the upper floors, but may include a cafe, restaurant, or boutique on the ground floor. Renters may find they don’t have to travel very far at all for that morning barista-made flat white.
#5 Renting Will Come with More Convenience
Can you negotiate apartment rent? As more and more renters enter the market, landlords are competing for their business by making it easier to complete renting transactions. This means convenient features becoming more common. Renters are well within their rights to expect:
- Digital payment – No more sending physical checks to pay rental prices through the mail every month. Renters can now pay their rent through services like PayPal, Zelle, or Venmo, or through their rental community’s online portal.
- Digital communication – Landlords are more likely than ever to offer digital communication. This could include everything from texting casual updates to in-app conversations. Some may even have an app that allows renters to track the status of their maintenance requests for their rental unit.
Common: Rent with a Built-in Social Life
It’s not too late to dip into the real estate market. Moving to a new city (whether that’s Las Vegas, San Antonio, New York, San Francisco Bay Area, or anywhere in North America) can sometimes be a lonely and isolating experience. But as urban populations continue to rise, it’s time for all these new city dwellers to band together. Among the other trends to expect in 2023, coliving and communal living opportunities are breathing a social spirit back into renting.
Options like Common are making it easier than ever for renters to forge meaningful connections in their new environment. With organized events and the ability to chat with fellow renters in-app, a social sphere is practically built into your renting experience.
And with the option to rent a home that comes fully furnished, you’ll also have a live-in-ready space where you can spend time together with all your fellow renters.
Our buildings are currently in 10 different U.S. cities, and we’re rapidly expanding. Find your next home with Common today!
- Statista. Distribution of renter applicants in the United States in 1st half 2022 by generation. https://www.statista.com/statistics/1244410/share-of-rent-applicants-in-the-usa-by-generation/
- Bloomberg. Will Remote Work Continue in 2023? https://www.bloomberg.com/news/articles/2022-12-23/will-work-from-home-continue-in-2023-if-there-s-a-recession
- Nasdaq. Housing Market 2023: Early Predictions To Know Now. https://www.nasdaq.com/articles/housing-market-2023%3A-early-predictions-to-know-now
- Center for Sustainable Systems. U.S. Cities Factsheet. https://css.umich.edu/publications/factsheets/built-environment/us-cities-factsheet
- Rocket Mortgage. A Guide To Investing In Mixed-Use Property. https://www.rocketmortgage.com/learn/mixed-use-property