With softening marketing conditions, multifamily owners and operators are under pressure to maintain occupancy at their properties and generate demand. Record rates of apartment completions and new construction, higher vacancy rates compared to last year, and declining rent rates are a few of many factors contributing to a slower market. These trends have opened opportunities for property teams to revisit their multifamily marketing playbook and find ways to efficiently generate renter interest in the future.
Here are the top five major market trends that impact a property’s day-to-day operations this year.
One: Digital costs are increasing
The cost to reach renters has also risen. Compared to 2021, Meta’s cost per thousand shot up 61%, TikTok’s CPM came in at 185% higher and Google’s programmatic display CPMs rose 75%.[1] A variety of factors have caused this rise in prices, including price volatility of new ad platforms and policy changes that make ad targeting more difficult and expensive. In an industry already challenged with effective targeting and FHA requirements, multifamily advertisers have to be extra vigilant in effectively using ad dollars in the future.
Two: New renter search trends
Where many renters used to be “digital-preferred,” they are now digital first. Trusted sources used in buying decisions have shifted due to online influencers and expanding media consumption. More than half of consumers (51%) say an influencer endorsement caused them to purchase in the past two years.[2]
Renters expect a streamlined experience where properties anticipate their needs and are available to answer questions around the clock. This expectation can present challenges for properties that are not yet digital first. A renter is more likely to lease with a property that can answer questions via webchat and then seamlessly schedule a tour online.
Three: Record rates of new construction
There is a growing supply of new properties entering the market. This year, there are 943,000 units of multifamily housing under construction, according to the National Association of Home Builders.[3] This is an almost 50-year record high. More projects are in the process of being completed at one time than we’ve seen since the 1970’s. For renters, this means more options in their apartment search. For established properties, this heats up competition against new properties entering the local market. To stand out from competition, properties can assess competitor strategies, modernize their marketing practices and aim to make the renter search experience as seamless as possible.
Four: Higher vacancy rates
During what is historically the busiest leasing period, apartment demand unexpectedly fell in the third quarter of 2022.[4] The U.S. Census Bureau reported rental vacancies in the last quarter of 2022 up 5.8% nationwide compared to 5.6% in Q4 of 2021.[5] Midwest and Southern regions had the sharpest increases in vacancy last year, up to 6.9% and 7.3%, respectively. The Western region followed behind at 4.2%.
Rising inflation rates, mass layoffs, and high costs all contribute to a broader sentiment of economic uncertainty. In response, many renters have paused moving or are combining households to save costs. As vacancy rates climb, property marketers have had to focus on resident retention and explore new channels to bring in renter leads.
Five: Declining rent rates
After record-breaking spikes in rent rate growth over the last few years, rent rates nationwide have also started to cool. Analysts across the board expect this pattern to continue in 2023, with effective rent growth projected to drop by as much as 4.3%.[6] Owners and operators can get ahead of this decline by maximizing efficiency in their operations. Whether it’s finding more cost-effective channels to reach renter audiences or automating manual tasks that add time to leasing teams, new tactics can help curb costs.
How to secure your property’s place in the market
Properties can drive demand and more easily convert renter leads to leases by future-proofing operations, marketing, and renter communication strategies. Your Multifamily Marketing Playbook, a new report from Rent., dives into major market trends and how they impact your team. Download now to find ways to keep demand for your property high despite market change.
[1] The price of digital ads has skyrocketed – here’s how to counteract it. The Drum. April 22, 2022. https://www.thedrum.com/opinion/2022/04/28/the-price-digital-ads-has-skyrocketed-here-s-how-counteract-it
[2] How Each Generation Shops in 2023. Hubspot. July 22, 2022. https://blog.hubspot.com/marketing/how-each-generation-shops-differently
[3] Multifamily Housing Projected to Weaken in 2023. Multifamily Executive. February, 2023. https://www.multifamilyexecutive.com/business-finance/multifamily-housing-projected-to-weaken-in-2023_o
[4] Apartment demand unexpectedly fell during its busiest season, according to a new report. CNBC. October, 2022. https://www.cnbc.com/2022/10/06/apartment-demand-fell-during-busiest-renting-season-realpage-report-says.html
[5] Current Population Survey/Housing Vacancy Survey. U.S. Census Bureau. January 31, 2023. https://www.census.gov/housing/hvs/files/qtr422/rvr422.jpg
[6] 2023 Apartment Housing Outlook. National Apartment Association. January 12, 2023. https://www.naahq.org/2023-apartment-housing-outlook