T
he rental market is finally showing signs of relief after a construction surge flooded it with new apartments. Demand for rentals has increased significantly, reaching levels not seen since 2021, according to an analysis by CoStar. This shift marks a pivotal moment for landlords, who have been struggling with high vacancy rates due to the largest construction boom in four decades.

    Over the past two years, over 1.2 million new apartments were built, but they're now gradually filling up as renters rush to grab leases. With the economy holding steady and home prices sky-high, landlords may soon be able to hike rents next year. An additional 672,000 units are expected to be completed by the end of 2024, but a slowdown in new projects is anticipated for 2025 and beyond.

    This newfound confidence has boosted investors, leading to a rise in apartment building sales across the country. Cities like Denver, San Francisco, and Washington D.C.'s suburbs have seen significant activity. However, not all cities are experiencing growth; Austin, Texas, faces a severe overbuilding issue with a vacancy rate of 15%, making it the worst apartment market in the US.

    Despite this, other cities are showing resilience, with rent renewal rates growing by more than 5% in places like New York City and Los Angeles. The return-to-office mandates may also boost urban rental demand, particularly in major employment hubs. Apartment sales have been increasing due to affordability challenges that keep renters from purchasing homes, making housing costs a hot topic on the political stage.

    As potential rent hikes loom, it's clear that the rental market is shifting towards landlords' favor. With over 672,000 new units expected to be completed by the end of 2024, and a slowdown in new projects anticipated for 2025 and beyond, landlords may soon have more control over rents.