Notable Changes in the US Rental Market

 

The US rental market is among the world's largest and most dynamic, accommodating over 44 million households. It has undergone a rapid transformation in recent years, positively and negatively changing its landscape.

This market has witnessed steep growth in the past decade, primarily due to increased demand for apartments fueled by various factors. For instance, rising mortgage rates, currently at а 16-year high, have led many would-be homebuyers, both individuals and families, to rent instead.

Similarly, Millennials and members of Gen Z are further driving rental housing demand, as many prefer the flexibility of renting. Some want to rent for years before purchasing a home. With many flocking to cities for better employement opportunities, the pressure for more rentals keeps piling up. The urbanization rate in the US is now at over 83 percent of the population residing in urban settings.

Subsequently, the increasing demand for rentals has driven up rent prices, surpassing inflation rates, according to a Pew Research Report. From 2017 and 2022, rent prices in the US surged by 18 percent, burdening 46 percent of renters who allocate а sizable portion of their income to rent payments. The residents of some states, such as California and New York, are particularly impacted by high rent costs.

The COVID-19 pandemic has also affected the rental market, causing widespread economic disruptions and increased tenant delinquencies from people facing financial hardships due to job losses or reduced incomes. Moreover, with the government implementing measures to prevent evicting defaulting tenants, many landlords are experiencing declining rental revenues and struggling to maintain their properties and meet their financial obligations.

When individuals switched to working remotely during the pandemic, it gave them more flexibility. The shift to remote work has changed the rental market since then. The demand for office space decreased, commercial rents fell in response, and downtown areas in particular suffered higher vacancy rates. Conversely, there has been a surge in residential property demand as remote workers seek suitable spaces for their home offices. As a result, landlords have adjusted their investment priorities, focusing on amenities such as high-speed Internet, dedicated workspace areas within units, and workout areas in shared spaces.

Regarding investments, previously, individual landlords held the majority of rental properties. Today, large investment firms, such as private equity firms, have emerged as significant market participants. Not only are these institutional investors acquiring rental properties and purchasing portfolios of properties, they are also concentrating their ownership in specific neighborhoods. This concentration reduces the available rental properties for individuals and small investors and poses affordability challenges for residents, since the control the institutions gain may influence prices, making housing less affordable.

Moreover, technological advances, such as the accessibility of online platforms like Redfin and Zillow, enable investors to browse listings and acquire and oversee rental properties from remote locations. This provision has led to the rise of what is known as “laptop landlords.” Various tech companies have also entered the market, offering services that facilitate property purchases for investors and the remote management of rentals. Landlords also leverage technological tools, such as algorithms, to enhance rental pricing, simplify tenant screening, and automate property maintenance procedures.

Increased regulation and transparency in the rental market are crucial for addressing concerns regarding ownership, rent increases, and affordability. Implementing appropriate regulations allows tenants to understand their rights, knowing landlords cannot impose excessive rent hikes or evictions. Landlords, in turn, also benefit from transparent guidelines that promote fair practices and protect them from legal complications.

Tackling the Affordable Housing Predicament

 Renters and prospective buyers in the US have witnessed housing prices increase since the Great Recession. The COVID-19 pandemic has further exacerbated this trend. Low-income families have been particularly affected, as the shortage of rental homes has risen to 7.3 million in 2023 from 6.8 million in 2019. However, there are strategies that can help alleviate this crisis.

Promoting affordable housing is one solution. Local governments can offer builders tax breaks, reduced permit fees, and other incentives to encourage them to construct low-cost, high-quality homes. Local governments can also streamline the permit-acquisition process to create a favorable environment for builders and developers.

Embracing manufactured housing instead of on-site construction is another cost-effective solution. Developers build manufactured homes in factories and then transport them to desired locations for assembly. Expanding manufactured housing production can increase the number of affordable housing units, meeting the demand for rental units and homes, especially for low-income families.

Sometimes, prospective homebuyers struggle to meet home ownership requirements, leading them to continue renting, which drives up rental costs. Alleviating this pressure necessitates removing barriers to home ownership through practical steps, such as lifting restrictions on providing mortgage loans to purchase condominium units, promote the construction of more condos that could serve as an entry point for home ownership. Additionally, implementing policies such as down-payment assistance can help prospective buyers and reduces the strain on the rental market.

Governments at all levels can also assist low- and moderate-income families through subsidies for acquiring and constructing houses. The low-income housing tax credit (LIHTC) program addresses the housing crisis by offering incentives to developers and investors to create new affordable housing or rehabilitate units designated for this target demographic.

In addition to subsidies, preventing the loss of affordable housing is equally crucial. One way to do so is by providing support and resources, such as eviction prevention programs for renters to prevent homelessness. Such programs assist renters by offering financial aid, legal representation, and mediation services, and aim to address underlying issues. Moreover, with many affordable units at risk of becoming more expensive due to their affordability agreements expiring, governments can assist by offering incentives to help property owners keep the rents lower.

Another way to address the crisis is to comprehensively assess publicly owned assets, including underutilized or vacant lots, and designate them for housing development. Local governments can create a list of suitable vacant lots and sell or lease them at a reduced cost to developers of affordable housing. Local governments can also donate such lands to nonprofit organizations specializing in affordable housing projects. Montgomery County in Maryland has implemented similar policies, promoting low-income housing development on public land.

Affordable housing trust funds are also crucial financial mechanisms in major cities, offering funding and assistance for developing and preserving units intended for low- to moderate-income earners. These funds help bridge the financial gap between affordable housing development costs and available resources, such as private subsidies and LIHTC. Seattle and Philadelphia are among the cities that have used trust funds to bolster their affordable housing inventories.

How Zoning Laws Affect Affordable Housing

The US needs more than 7 million additional affordable housing units in order to adequately house the nation’s lowest earners. Unfortunately, there are several obstacles to expanding affordable housing stock. Zoning laws are among the largest factors.

Zoning laws are regulations that oversee housing construction and development. Their primary purpose is to create residential areas that offer a high quality of life. For example, zoning laws may regulate that chemical-producing industries cannot operate within a certain distance from occupied homes.

However, zoning laws have also been used to promote segregation and homogeneity in neighborhoods. For example, some jurisdictions have placed minimum parking requirements for new multifamily units. On the surface, this may seem practical, as it reduces the use of on-street parking.

However, it also greatly increases developers’ construction costs. As a result, developers may aim to produce fewer, more expensive luxury units rather than building higher-density housing. Zoning laws can also outlaw multifamily units in areas with single-family homes. This prevents neighborhoods from housing residents from diverse economic backgrounds.

Many jurisdictions also prohibit single occupancy properties, which offer cheap, partially communal accommodations for single residents. The dearth of these properties has led to single individuals paying a higher percentage of their incomes toward rent or mortgages.

Zoning laws are set at the local level, and changing these laws can face stiff opposition. While the vast majority of Americans want more affordable housing, many do not want these units developed near their homes.

This discrepancy is often known as NIMBY, or not in my backyard. Opponents of affordable housing projects cite various reasons for their stance. They may worry about a drop in existing property values, an increase in crime rates, or future tax hikes.

NIMBY advocates may not oppose affordable housing altogether, but may prefer for the project to take place in a different location. However, this can make new residential projects unfeasible, as other parts of town may not have the space or resources to add additional residents.

Developers, affordable housing advocates, and politicians have made a considerable effort to combat NIMBYism and restrictive zoning laws. For example, cities can reform laws to allow developers to convert single-family homes into multifamily units.

Some developer funding programs have included set-aside requirements to incentivize affordable housing. In order to qualify for funding, developers must ensure that a certain percentage of new units are reserved for individuals making less than the area’s median income.

These units must reflect the needs of the market so that there are appropriate units for individuals, couples, and families. This arrangement allows developers to recoup their investment and increase the number of market-rate units, while also providing affordable housing.

Changing property tax laws can also encourage developers to create more housing. In many cities, a residential building incurs more tax than a parking garage. However, if taxes became use-neutral, then developers would pay a flat tax based on the amount of land rather than property type. This could encourage more affordable housing developments.

Activists can also address NIMBY proponents’ concerns by demonstrating that affordable housing does not impact house values. For example, a study of affordable housing developments in Chicago found that developments for low-income residents actually increased housing prices in nearby neighborhoods. Affordable housing developments also do not result in an increase in crime. These outcomes have been observed in several other housing markets.

 

AMA Certificate and Training Opportunities

 

The American Management Association (AMA) is a global leader in areas of professional development, with a focus on the connection between a skilled workforce and organizational success. With this in mind, AMA provides members with a wide range of training and certification opportunities.

At amanet.org, management professionals can use the course finder tool to look for a specific area of training, or can instead browse through a list of the organization’s top courses. A few of the most popular and well rated courses include Management Skills for New Managers, How to Communicate with Diplomacy, Tact and Credibility, and The 7 Habits of Highly Effective People Signature Edition 4.0. Many AMA courses and seminars can be taken in person or in a remote learning environment. Each of the top 40 AMA courses maintains a perfect 5.0 rating with members, most with hundreds or thousands of individual ratings.

While AMA balances in-person training with virtual education, the latter has become increasingly important in recent years. The organization maintains industry best practices for its virtual learning offerings, and while the COVID-19 pandemic has compelled many businesses and professional groups to reevaluate their virtual infrastructure, AMA has been creating and refining virtual learning services for more than a decade. Virtual learning consists of both real-time and on-demand sessions led by knowledgeable instructors, and users can speak with an AMA consultant about specialized, private group training options.

AMA has developed a variety of certificate programs over the years, allowing members to fully immerse themselves in the industry’s most important and complex subject areas. Certificate programs have been designed first and foremost to help managers further their individual careers. That said, the knowledge and skills associated with each certificate should allow managers to add measurable value to their companies.

The 12 unique AMA certificate programs range from Diversity, Equity and Inclusion to Women’s Leadership. Managers interested in women’s leadership education should also check out the Women’s Leadership Center and its depth of courses for women. AMA has developed a five-day “MBA” Certificate Program designed to provide managers with vital skills explored in a traditional master of business administration program. Other certificate programs focus on subjects such as sales and employee training.

AMA maintains a short online quiz that managers can use to assess their professional skills and make a more informed decision about which certificates they should pursue. That said, many certificate programs complement one another and management professionals may be interested in signing up for the AMA-CPM 3-Step Value Pack, allowing for a more streamlined, less costly path to each certification.

Finally, the AMA works to support the federal government in several ways. AMA government learning solutions include discounts on digital training guides and other educational services for members of the government. AMA can provide members of the federal government workforce with educators with intimate knowledge of both the public and private sectors.

Members can visit AMA online to learn more about these and other educational and professional development opportunities. The AMA website features a special offers section that lists all of the active promo codes and discounts for courses and certificate programs, as well as a free digital catalog of all AMA offerings.