Rent Negotiations Tilting in Favor of Tenants

Now is the Time of the Renter

You have more leverage to negotiate a better rent now than any time this year, according to a national online marketplace.

Although median rents are $250 a month higher than they were three years ago at this time, the trend for rents has been edging down for five straight months, according to the January 2024 Apartment List National Rent Report. 

Rent growth year-over-year stands at minus 1.1 percent, according to Apartment List. That means that, on average, apartment rents are cheaper than they were last year.

“This stands in sharp contrast to the prevailing conditions of 2021 and 2022,” noted the report, “when rent prices were surging and year-over-year growth peaked at 18 percent nationally.”

Surge in New Apartments

Rents typically decline slightly during the coldest months of the year. However, the current price slide also has to do with an increased supply of apartments. 

In December, according to the U. S. Census Bureau, construction began on 417,000  buildings with five or more rental apartments. That same month, 509,000 such apartment buildings were completed.

“With so many units in the construction pipeline, 2024 should be the strongest year for new multifamily supply since the 1980s,” according to Apartment List.

“In 2024, multifamily operators should brace for swelling competition from new inventory, and renters should expect to find more options when searching for their next home.”

Rent Growth Slowing

Last year posted the second lowest rent growth of any since 2017 when Apartment List began keeping records. Only the pandemic year 2020 posted rent growth lower than 2023.

Looking ahead, Apartment List sees the supply-demand equation favoring tenants. 

“On the supply side of the market, our national vacancy index stands at 6.5 percent, slightly higher than the pre-pandemic average,” notes the report. “This represents the culmination of vacancies gradually easing for two full years after a historic tightening in 2021. And with the construction pipeline of new apartments still near record levels, we expect that there will continue to be an abundance of vacant units on the market in the year ahead.”

Housing Market Increases Importance of Rent Negotiations

Historically, many people have viewed renting as a stopover on the way to home ownership.  However, in today’s tight market, that may be a dream deferred or abandoned.

Part of the problem seems to be generational. After all, baby boomers own 41.6 percent of the real estate wealth in America. 

Coming Housing Tsunami or Trickle

As of the third quarter of 2023, baby boomers owned 51.3 percent of total wealth in the U. S., according to Statista. Much of that wealth comes from real estate. In fact, according to a report from Redfin, 79 percent of boomers own their own home. Gen X is not far behind at 71 percent. By comparison, Millennials are next in home ownership at 52 percent followed by Gen Z at 26 percent.

Last month, Meredith Whitney, CEO of Meredith Whitney Advisory Group, told the Investment Conference that a “silver tsunami” of boomer homes is primed to hit the real estate market. Her thesis is that boomers are approaching an age when they will become home sellers due to downsizing.

Zillow forecasts are in line with Whitney’s.However, the real estate marketing company estimates that it will take 20 years to sell the more than 20 million boomer owned homes. 

An influx of homes for sale should put downward pressure on house prices. But, over two decades? Millennials will be approaching retirement in 20 years. As a result, Millennials or anyone looking to jump into the housing market any time soon needs to maximize savings on rent.

Are You Ready to Negotiate Rent

Not all landlords are open to negotiation. Therefore, the only way to know is to ask. However, before you pop the question, develop a game plan.

Start with a self assessment. How have you been as a tenant? Have you always paid your rent on time? Have you ever been the subject of nuisance complaints? If you have had trouble in those areas, you have little or no bargaining power.

On the other hand, if you pay your rent on time and do not cause your landlord trouble, you are in a good position. 

Afterall, finding and keeping good tenants is the life’s breath of residential property management.

How to Approach Negotiations

When you approach your landlord – be polite, but not weak. Open your discussion with a request/statement followed by an alternate choice question. An alternate choice is a closed end question that leaves the respondent with an either or option. Good sales people often use alternate choice to build to their closing question. As an example, you might say:

“I would like to talk to you about my rent. Could we get together this afternoon, or would tomorrow morning be better?”

If neither of those times work, keep offering alternate choice questions until you get a set time. 

This technique works better than an open ended question, because it gently forces the landlord to choose between two times to talk about your rent.

Only asking an open-ended question, such as, “Can I talk to you about my rent?” allows the landlord to wiggle out of the discussion.  For instance, if you ask – “Can I talk to you about my rent?” – the landlord can brush you off with – “Sure. Let me get back to you.”

Let the Games Begin

Once you are at the negotiating table, let your landlord know why you are an asset to him/her Highlight your payment history and how well you have taken care of your apartment. In addition, if you would like to stay in place beyond your current lease, let the property owner know you are open to a long-term lease.

During your negotiation, it is also a good idea to let your landlord know you have other options. If your research turns up other apartments with lower rents or more amenities, drop that information into your discussion.

A word of caution here. Remember you are having a conversation – not a confrontation. Do not hit your landlord over the head with features of other apartments that might be seen as better than his/her property. That will only make your landlord defensive. Inturn, it will reduce your chances of getting the rent you want.

Soften the blow before bringing up something that might put your landlord on edge. For example, you might use a phrase like, “I really enjoy living here, but . . .” or “There are a lot of great things I like about living here. . .”

Your Win

As the old saying goes, “if at first you don’t succeed, try, try again”.  If you do not get a lower rent now, try again just before your lease is up. Your landlord may think twice about raising your rent. Afterall, it takes time and money to find new tenants. In addition, competition for such renters is primed to heat up as more apartments are being built.

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Max Erkiletian

Max K. Erkiletian is a seasoned journalist and analytical reporter with nearly 40 years of experience. He has been nominated for several honors and was part of a team that won the Missouri Press Association’s Community Service Award.

His experience has included covering a wide range of topics, from crime reporting to politics and music. His interview subjects have included U.S. Senators, such as Tom Eagleton; economists, such as Arthur Laffer; former Fed Chair Paul Volcker; and musicians, such as Muddy Waters and B. B. King.

Today, he focuses on personal finance, consumer protection, economic shifts, and investment trends. His reporting aims to make complex issues understood and show how events impact consumers’ wallets.