15 Trends for Property Managers
With the Covid pandemic receding in 2022, property managers will see their roles, challenges and opportunities change. But is it roles or goals that are the key issues?
While profitability declined as a priority for property management companies during the last two years, there’s little doubt it will re-emerge. With inflation and taxes rising, property managers will need to focus on profitability to stay afloat.
Since December 1995, the producer price index for residential property management services has risen 39.2% for an annual growth rate of 1.537% — survey from ipropertymanagement
That survey found that respondents got into owning property for a stream of income — profitability. Yet, it seems property management companies fees are rising fast. A refocus on profitability in the industry is likely to force property managers to reduce costs and prove performance. Property management tools will be vital.
Most property managers earn revenue from maintenance, collections, rent fees, leasing and advertising, however income from inspections and evictions is receding. The quest will be to create a mix of services that responds to the post pandemic demand trends.
Growth During an Era of Housing Shortages
Again in 2022, it is shortages in the rental market and shortages of staff, materials, contractors, and new regulations that will pressure managers. Are plans for growth realistic?
One survey reported that property managers expect conditions to remain exactly the same as 2021.
While lower supply will raise rent prices, cost management will become a keen point of interest for many. With higher stakes, tougher financing, and bigger management challenges, some will decide to sell their rental properties as the challenge becomes too much to bear. HOA managers with lower budgets may find conditions even more demanding.
Yet with the economy reopening and housing not affordable, the rental market will be hotter. According to one recent survey, single family houses are the optimal rental product now. With built to rent projects on the rise, house rentals will become even more popular to property management companies.
One stat that is consistent throughout the years is the desire for growth. Nearly half of property managers have growth as a top priority this year. Almost 3/4 added to their managed portfolios last year. 5 years ago, efficiency was the top priority but it seems the adoption of property management platforms has resolved that issue. Now software such as ManageCasa is helping manage growth, control costs, and ease the problem of shortages.
Another stat you might find interesting is owners are relying less on property managers for financial or legal advice. It could be property managers lack the knowledge or tools to assist in that area any longer. Better tools might help you exploit that opportunity.
Property landlords also report that maintenance and tenant management are the top 2 difficulties they need help with. They would be well advised to resolve them using a solution that eliminate issues before they happen. A good property management platform will let them manage at that higher level.
Of course, the property management market is driven by renter demand so let’s take a look at the demand side.
The Dominant Trends Coloring 2022
With the dark clouds dissipating and sunny skies ahead, let’s look at what may be 15 significant trends in the property management sector for 2022.
- increasing employment (job growth will be significant and it will draw more workers back into the active workforce)
- increasing mobility (workers want better jobs and will move to be close to them)
- adoption of digital property management solutions (regulation, more properties, and fewer qualified staff will force landlords and property managers to find a full platform to ease their workloads)
- increased regulation in the industry (Democrats are all in on regulation, higher taxes and tenant protections, and property laws will increase)
- home prices and rent prices will rise strongly (low supply will draw renters out from where they currently are huddled against the pandemic to find their own apartment)
- investors buying single family houses to rent out because rental sector has strong demand (2021 was a record year for big investment firms buying houses across the US)
- multifamily and apartments in big metros will see lower vacancy rates as workers return to work at the office (houses and townhouses too expensive and too much to qualify for mortgages, forcing most returning workers to rent)
- Manhattan NY and Bay Area markets will see significant return of rental demand (workers returning to work in Corporate offices and apartment vacancy will plummet)
- interest rates may rise a little but not in a major way (upcoming midterm elections will preclude rate hikes, and inflation will ease over the course of the year)
- increased rental demand and lower available rental housing supply (construction of new rentals hampered by lack of construction workers, land permits, high costs, and materials supply shortages and delays)
- supply chain delays (from timber to copper to PVC pipe, to windows, home electronics and appliances and parts, along with renovation materials. High growth states such as Florida and Texas could be hit harder. Regulations and shortages have hit the Uk market hard too)
- property management staff shortages (with workers not wanting to return to work yet, to a lack of trained, certified property professionals, more work will be delayed or performed by unqualified staff)
- more property management automation, because the new technology tools enable it (platforms can automate payments, inspections, tenant management, and more, taking workload off of landlords)
- small landlord’s unprofitable rental properties bought out by investment groups (small landlords burdened by high financing, unfavorable taxation, inflation, and higher turnover raises their business costs too high to bear)
- increase in demand for legal, financial, investment, marketing technology advice for landlords (the complexity of the modern rental property market will prove too much for some landlords)
There are those who predict a much darker view of 2022, but much of that is painted with a Covid 19 brush. The first 3 months will be status quo for rental property managers and property management firms, but the sun of spring and summer will see the disease lose its grip on us.
Which Cities Show Promise for Rental Rate Rises?
In Forbes recent report, Boise ID, Austin TX, Spokane WA, and Salt Lake City UT showed the strongest price to rent ratios. All four had price to rent ratios of over 30. This means prices are high but rents are currently comparatively low, which highlights their potential. Forbes points out that rents cannot be raised quickly for legal, leasing, or tenant reasons.
So while Austin and Dallas might be very attractive given anticipated population growth and strong economic recovery there in 2022, the ability to access that rent potential may be difficult, at least for 2022. Given housing shortages and anticipated infrastructure spending, it’s highly unlikely the rental market would crash. Even if home prices were to fall in some of these hot cities, rental demand would still remain. However, landlord investors may want to review lower priced markets with a trending economic picture that currently have lower average rent prices.
Apartment Guide’s latest State of the Market Report for December reveals rent rises year to year with surprising results. Some notable metros are showing lower rent rises than you might expect. Yet cities to watch this year would be Austin, Dallas, Houston, Orlando, Long Beach, Anaheim, Santa Ana, and Irvine as the pandemic recedes. See more on our rental property advertising service which incorporates Apartment Guide listings.
Tucson, AZ, Anaheim, CA, and Santa Ana, CA had the highest combined rent growth for both 1 and 2 bedroom rentals. See more on the US rental market outlook. This data from Apartmentguide.com’s report:
|City, State||1 Bedroom Average Rent, November 2021||1-BR YoY Change||City, State||2 Bedroom Average Rent, November 2021|
2-BR YoY Change
|Long Beach, CA||$2,986.00||55.4%||Jacksonville, FL||$1,926.00||54.3%|
|Orlando, FL||$2,148.00||54.9%||Tucson, AZ||$1,654.00||50.9%|
|Anaheim, CA||$3,106.00||50.8%||Fort Wayne, IN||$1,503.00||47.2%|
|Spokane, WA||$1,432.00||48.6%||Hialeah, FL||$2,798.00||44.0%|
|Reno, NV||$1,967.00||48.3%||Anaheim, CA||$3,233.00||39.7%|
|Tucson, AZ||$1,147.00||36.9%||Arlington, TX||$1,578.00||36.7%|
|Saint Petersburg, FL||$1,973.00||36.5%||Houston, TX||$2,265.00||36.3%|
|Santa Ana, CA||$2,903.00||34.2%||Albuquerque, NM||$1,546.00||36.1%|
|Port Saint Lucie, FL||$1,882.00||33.6%||Birmingham, AL||$1,456.00||34.1%|
|Mesa, AZ||$1,396.00||33.0%||Santa Ana, CA||$3,707.00||32.0%|
|Lexington, KY||$1,098.00||31.9%||Raleigh, NC||$1,732.00||27.7%|
|Boise, ID||$1,782.00||30.9%||Mesa, AZ||$1,755.00||27.4%|
|Albuquerque, NM||$1,339.00||30.7%||Las Vegas, NV||$2,016.00||27.2%|
|Irvine, CA||$3,268.00||30.6%||Glendale, CA||$4,207.00||27.2%|
|Aurora, CO||$1,862.00||29.4%||Jersey City, NJ||$4,543.00||27.1%|
|Austin, TX||$1,747.00||29.2%||Aurora, IL||$1,936.00||25.6%|
|Houston, TX||$1,590.00||28.8%||Henderson, NV||$1,951.00||25.2%|
|Fremont, CA||$2,685.00||27.0%||Overland Park, KS||$1,715.00||24.2%|
|Seattle, WA||$2,502.00||25.9%||Aurora, CO||$2,105.00||23.9%|
If you’ve been burdened the past two years, it’s understandable. The correct route to success is to investigate the best, cloud-based, next-generation property management systems. A system such as ManageCasa gives you the power of large, enterprise property management companies. From automating service to meeting government regulations, it’s how to optimize your business for the next ten years.
Check out the work automation and tenant management excellence of ManageCasa now.
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