Rental Concessions Increase Amid Attempts to Maintain Current and Lure New Residents

Zillow Group Inc. reported on Monday (11-20-23) that rental concessions—offers meant to entice tenants, such as free months of rent or free parking—are at their highest level in more than two years despite stronger rental demand.

Zillow’s latest data shows about 30% of rental listings on Zillow advertised concessions in October, a surge that signals a significant shift in the rental market. According to Zillow, within the past five years, concessions reached a peak in February 2021 when 36.7% of rentals offered incentives, coinciding with low renter demand during the pandemic. That share dropped as far as 19.4% in July 2022. However, the current rise comes as typical rent prices are nearly 30% higher than pre-pandemic levels, and annual rent growth just ticked back up after nearly two years of slowing down.

Adding additional background and analysis to the report, Anushna Prakash, an economic research data scientist at Zillow, said:

“The pandemic era’s increase in concessions was a direct response to decreased renter demand. Currently, we’re witnessing a different scenario where the demand for rental housing is high, but there’s been a notable rise in supply. To differentiate themselves from newer, potentially more amenity-rich apartment buildings, property managers are stepping up their game, offering more incentives to attract potential renters with a broader range of choices.”