Rental Deals Can Still be Found, But Demand is Rising

Current real estate market conditions have the buying-versus-renting proposition on its head.

According to Zillow, renters usually hold the upper hand in fall and winter because fewer people move in the cold months, and property managers with empty units become more flexible, leading to deals. That pattern may not hold this year, however.

Zillow’s Observed Renter Demand Index tracks how much attention rental listings get on Zillow, and the online brokerage noted it is up 19.2% from a year ago.

Zillow said the cause rests firmly in the for-sale market. It said the typical new homebuyer’s monthly payment is $3,037, up 5% over the past year, while the typical rent of $1,932 is up 2.7%. In other words, buying now costs roughly $1,100 a month more than renting, and shoppers who are unable to make that work are looking at rentals instead.

The rental market is starting to respond.

Small Moves

According to the Zillow index, September’s 0.1% monthly increase beat the pre-pandemic norm of 0% for the month, and annual growth edged up to 2.7% from 2.5% in the August rental report. Those are small moves, but they point toward a tightening market, Zillow said.

There is still room for renters to bargain, Zillow said.

In September, 39.6% of rentals on Zillow offered a concession such as a free month or reduced fees, 2.2 percentage points more than a year ago.

But “those deals were priced when demand was softer,” said Mischa Fisher, Chief Economist at Zillow. “As more shoppers pile in, and as rent growth accelerates, property managers have less reason to keep offering them.”

Rents Held Steady Where New Apartments Went Up

Renter demand rose the most in San Jose (up 82.5%), San Francisco (up 66.9%), Austin (up 49.3%), Miami (up 48.9%) and Phoenix (up 43%), according to Zillow. Rental prices didn’t rise in all those markets, however. Zillow noted that in San Francisco and San Jose, rents are up 11.8% and 8.3% over the past year. In Austin, Miami and Phoenix, they are up 0.7%, 1.8% and 1%, because new construction has kept supply in step with demand.

Zillow noted that apartment completions hit a 38-year high in 2024, and the extra supply has kept vacancies elevated and prices soft.

Single-Family Rentals

“That trend is fading,” Fisher said. “Property managers who position themselves well now will be better placed as conditions tighten over the next year or two.”

Zillow reported that single-family rents are higher than a year ago in all 50 of the largest metros, and demand for them is growing more than twice as fast as for apartments. A typical rental house costs $2,266 a month. However, Zillow noted that owning one would cost $771 more once taxes and insurance are included.