Zillow predicts in 2025 that rent concessions will decline and more rental properties will become pet-friendly.
“Apartment renters enjoyed a relatively friendly market in 2024, at least compared to the record rent growth seen in 2022,” Zillow said in the report.
While landlords in parts of the country have seen rents decline slightly in 2024, the report says “the share of rental listings on Zillow offering a concession — such as free weeks of rent or free parking — is at a record high.” However, the company “expects renters will not have as much opportunity to negotiate for that free month of rent by the end of 2025.”
The multifamily-construction boom is the primary reason for the rise in concessions. More multifamily units are hitting the market than at any time in the past 50 years, pushing property managers to compete for renters. “Those fireworks are predicted to fizzle in 2025, especially in the second half of the year,” the report says.
Pet-friendliness will become nonnegotiable for property managers
The report notes that renters are getting older, and they are not putting off “adulting” milestones such as moving in together or getting a pet before they buy a home.
The median age of a renter has risen to 42, and they are settling into the renter lifestyle. Fewer renters considered buying this year, as renting is more affordable in some markets.
With 58% of renters having a pet — up from 46% before the pandemic — “it is no wonder that nearly half said they passed on a particular property because it was not pet-friendly. In today’s more competitive rental landscape, not allowing pets may put property managers behind the eight ball,” the report says.
Other highlights from the report:
- Here is where we get to the report’s bold predictions for 2025. Zillow sees Americans increasingly embracing small homes and attached options. Affordability may be the cause, but a trend toward higher densities is undeniable.
- The report projects a 2.6% home price change for 2025. That is a solid and manageable number. And there will be at least some shift in favor of buyer negotiating power, though that will be regional, such as in the southwest.
- The company highlights its “BuyAbility” feature as one way buyers can navigate the often-tricky interplay of prices and mortgage rates to help them figure out precisely what they can afford.