Current US Rental Market Trends and their Impact on Relocation

If you’ve set your relocation plans in motion or are still at the drawing board, it may be necessary to sit up and take stock. What are the key trends in the US rental market and how will they affect your relocation plans? Here’s a quick roundup of key things to note.

This year has been eventful for the US rental market. We’ve gone from the dizzy heights of record-breaking rental prices in the first half of 2022 to rapidly decelerating sales and falling prices as of October. 

While a ferocious spate of interest rate hikes by the US Federal Reserve has helped shape these trends, a few other factors are influencing a different picture in the market. Changing buyer preferences, macro-economic pressures, and an evolving employment landscape are shaping a market that players may not recognize by next year. 

As a result, if you’ve set your relocation plans in motion or are still at the drawing board, it may be necessary to sit up and take stock. What are the key trends in the US rental market and how will they affect your relocation plans? Here’s a quick roundup of key things to note.

Slowing rental prices 

With rental prices at their “ highest in decades ” earlier in the year, it seemed the average renter was being priced out of the market. Driven by various pressures, such as the end of the COVID eviction moratorium and higher home prices, the cost of rent had surged by 4% in the US. 

While the average rent for a one-bedroom apartment in the US was just over $1,000 in 2020, rental homes in some of the largest cities in the US were going for double, or even triple, that amount this year. 

However, things look to be cooling down since the Federal Reserve embarked on a hawkish rate-hiking spree. According to recent figures, rental rates in the US declined by 0.4% over the last 90 days, and vacancy rates in the country have begun to rise, signaling slowing demand and a growing surplus of available homes. 

Why are rental prices falling? Rising interest rates are a major factor in the falling prices. The availability of rental homes is in part dependent on a steady rate of new homes going on the market. But with the recent rate hikes, home financing costs have risen, making home buying unattractive for many buyers. Consequently, there are homes to sell but fewer people to buy, thereby leading to falling home prices. 

Additionally, global economic worries and record-high inflation present a disincentive to move. Relocation will likely cost more, and potentially take longer, during this period. As such, fewer renters may be motivated to pack their bags and immigrate to the US. 

A changing demography of renters

Amongst those who are grabbing the relocation bull by the horn, we’re seeing a broadening demography with varying migration motives. Until recently, it was quite reasonable to expect the average relocating renter to be young, single, and in the early stages of their career. 

While that description still covers a sizable chunk of today’s immigrating population, there’s an increasing mix of profiles changing the demography. Renters today are just as likely to be seeking destination housing that matches their lifestyle preferences. And they’re likely to be influenced by remote work schedules, stage of life considerations, or the impact of the pandemic. 

In addition, we’re seeing renters:

• Migrating to a pricier urban environment from a university town

• Seeking deliberately short-term renting in anticipation of moving again, often due to short-term or rotational work assignments

• In their mid to late career stage making a personal decision to change environment with their family

• Choosing to rent given barriers to home buying such as rising interest rates and high inflation

Evolving relocation service preferences 

At the same time, relocation renters are evolving away from settled service preferences that have come to be regarded as standard in the industry. For example, relocation services are typically offered on a spectrum ranging from low-touch/self-service to high-touch/full-service models. 

The assumption is that those who want to be in control of their relocation experience are less likely to demand value-added or highly curated services. For instance, a renter seeking a low-touch experience may request help with navigating regulatory experiences but may choose to take care of their own transportation, layoffs, and welcome party. 

On the flip side, those seeking full-service or high touch interactions typically expect top-tier levels of relocation assistance. They want their relocation partner to be with them every step of the way, managing every experience, and leaving them with as little stress as possible. 

But we’re seeing changes to these service models. Increasingly, renters may request low-touch service and yet be of a mindset or profile that requires comprehensive personalized choices and a well-curated service offering. Likewise, the high-quality self-management approaches are no longer synonymous with low-touch or limited-service models. 

Renters will see this as a good development as it means they can enjoy a greater degree of flexibility to the relocation services they enjoy. 

The value in supporting relocating talent

In a world with a labor force more mobile than ever, it’s increasingly clear that employers can differentiate themselves by ensuring a 360-degree experience for their workers. Simply put, you’re more likely to attract better talent and maintain them for longer if you’re taking a proactive approach to their entire wellbeing. That includes providing them with the support and resources to relocate for work in conditions that create a satisfactory experience. 

Renters’ expectations of mobility or relocation services are increasingly synched with the consumer mindset in today’s economic landscape. Your employees want to be able to enjoy personalized choices and relocation options that meet their expectations of quality, choice, size, and environmental friendliness. 

While this sounds like a lot of work, the great news is that it’s possible to curate a customized relocation experience that is sensitive to budget constraints and business goals. At Expat-US, we can support you and your employees to coordinate a satisfactory relocation experience that tends to your talent and business needs.