We have just passed Q2 and are officially past the halfway point of 2023. As temperatures increase, we see increases in Q2 for the rental market. Some good and some bad. Overall, rent prices are increasing, but so are the vacancy days. A market analysis always looks back so we can try to predict what’s ahead. I state the obvious because it is important to remember that Q2 is typically your strongest quarter, and the third and fourth quarters are weaker, typically weaker quarters in real state.  So as we review, it is important to read between the lines and prepare for the last half of the year. The takeaway is to REDUCE your vacancy days by any means necessary. Reducing vacancy is achieved in 2 ways,  price and/or condition. If your property is not leasing, it is either price or condition. You should look to eliminate condition elements first.

 

Condition is the hardest variable only because the average landlord complicates the process. Once you realize that you can not make every tenant prospect love your home, you realize that condition means that you get your property to a state where 80% of the market will like the home. This is typically achieved by paint, flooring, and clean bathrooms.

 

The price is simple. No tenant has ever complained about a lower rent, but the name of the game is profit. Often owners get fixated on high rents and need to remember that single-family rentals are a marathon, not a sprint. Low vacancy rates, turnover, and maintenance costs can achieve profitability. These things are achieved by having homes in good condition, to begin with.

Overall Q2 Look

Below will show overall market averages for 2023 Q2 compared to 2023 Q1 and 2022 Q2. If you think it feels different than last year, you’re right. While rents have increased an average of 5%, the vacancy days on the market have increased by 42%. So you may be getting more in rent. It just takes you a longer period to get it. The numbers also show that rents are up from the 1st quarter and the days on the market are down. This makes sense, given that Q2 is historically the stronger quarter.

 

2023 Q2

     
 

2023 Q2

2023 Q1

2022 Q2

Change Over Quarter

Change Over Year

Total Count

786

717

724

9.62%

8.56%

Average Rent

$1,426.00

$1,318.00

$1,355.00

8.19%

5.24%

Avg Dpsqft

$1.00

$1.00

$0.99

0.00%

1.01%

Average DOM

57

61

40

-6.56%

42.50%

Average Age

1987

1983

1982

0.20%

0.25%

Average Sq Ft

1444

1373

1393

5.17%

3.66%

A Deeper Look

New Rentals Listed

     
 

2023 Q2

2023 Q1

2022 Q2

Change Over Quarter

Change Over Year

Total Count

910

1171

909

-22.29%

0.11%

1 Bed

44

96

53

-54.17%

-16.98%

2 Bed

202

277

203

-27.08%

-0.49%

3 Bed

547

646

570

-15.33%

-4.04%

4 Bed

115

145

81

-20.69%

41.98%

Two and three Bedroom units make up the vast majority of the market. However, we are seeing an increase in 4-bedroom activity from 2022. We will continue to see that trend but will likely stay within three and 2-bedroom availability. Four-bedroom homes did increase in rent and decrease in vacancy from Q1. 

 

Leased Properties

     
 

2023 Q2

2023 Q1

2022 Q2

Change Over Quarter

Change Over Year

Total Count

786

717

48

9.62%

1537.50%

1 Bed

38

52

179

-26.92%

-78.77%

2 Bed

192

155

426

23.87%

-54.93%

3 Bed

467

432

68

8.10%

586.76%

4 Bed

84

77

3

9.09%

2700.00%

2 bedroom homes had the largest rent increase and one bedroom have decreased. Some reports suggest that more people want to move in with roommates to reduce costs. While these numbers can not prove that theory, it would indicate that there may be something to it.
 

Activity by Zip Code

Compared to last year, all neighborhood days on market dates are up. Some more significant than others, 79424, 79416, and 79423, have felt that biggest impact. Days on the market for 79416 increased 81%, and rents have only increased an average of 3.45% from 2022.

Zip Code

2023 Q2 Count

2023 Q2 Avg Rent

2023 Q2 DOM

2023 Q1 Count

2023 Q1 Avg Rent

2023 Q1 DOM

2022 Q2 Count

2022 Q2 Avg Rent

2022 Q2 DOM

Rent-

Change over Quarter

DOM-

Change Over Quarter

Rent –

Change Over Year

DOM

Change Over Year

79424

118

$1,710.00

50

99

$1,611.00

55

126

$1,612.00

33

6.15%

-9.09%

6.08%

51.52%

79410

74

$1,357.00

67

66

$1,448.00

57

73

$1,337.00

57

-6.28%

17.54%

1.50%

17.54%

79407

64

$1,606.00

46

51

$1,426.00

61

49

$1,508.00

40

12.62%

-24.59%

6.50%

15.00%

79416

108

$1,408.00

69

94

$1,350.00

85

115

$1,361.00

38

4.30%

-18.82%

3.45%

81.58%

79423

137

$1,461.00

47

124

$1,333.00

50

113

$1,403.00

27

9.60%

-6.00%

4.13%

74.07%

79413

83

$1,326.00

61

69

$1,255.00

46

61

$1,320.00

43

5.66%

32.61%

0.45%

41.86%

79414

39

$1,250.00

50

60

$1,154.00

61

38

$1,228.00

31

8.32%

-18.03%

1.79%

61.29%

79411

43

$1,085.00

71

42

$1,000.00

51

54

$970.00

48

8.50%

39.22%

11.86%

47.92%

79415

9

$925.00

49

14

$960.00

49

3

$900.00

57

-3.65%

0.00%

2.78%

-14.04%

79412

13

$1,117.00

53

20

$941.00

57

20

$1,123.00

36

18.70%

-7.02%

-0.53%

47.22%

Activity by Bedroom

 

Bedrooms

2023 Q2 Count

2023 Q2 Avg Rent

2023 Q2 DOM

2023 Q1 Count

2023 Q1 Avg Rent

2023 Q1 DOM

2022 Q2 Count

2022 Q2 Avg Rent

2022 Q2 DOM

Rent-

Change over Quarter

DOM-

Change Over Quarter

Rent –

Change Over Year

DOM

Change Over Year

1

38

$668.00

56

52

$617

41

48

$614.00

50

8.27%

36.59%

8.79%

12.00%

2

192

$1,065.00

50

155

$982

43

179

$1,042.00

35

8.45%

16.28%

2.21%

42.86%

3

467

$1,518.00

59

432

$1,668

62

426

$1,467.00

39

-8.99%

-4.84%

3.48%

51.28%

4

84

$2,044.00

57

77

$1,955

62

68

$1,985.00

45

4.55%

-8.06%

2.97%

26.67%

Activity By Rent Range

The days on the market have increased significantly in the price points where most rentals are leasing out. This results from a saturation point in the market at these price points. With several build-to-rent neighborhoods developing around Lubbock, the popularity of single-family homes for investments. We can see this trend continue throughout 2023.

Rent Range

2023 Q2 Count

2023 Q2 Avg Rent

2023 Q2 DOM

2023 Q1 Count

2023 Q1 Avg Rent

2023 Q1 DOM

2022 Q2 Count

2022 Q2 Avg Rent

2022 Q2 DOM

Rent-

Change over Quarter

DOM-

Change Over Quarter

Rent –

Change Over Year

DOM

Change Over Year

<750

53

$658.00

54

86

$623

54

48

$614.00

50

5.62%

0.00%

7.17%

8.00%

750-900

55

$839.00

44

54

$858

49

54

$834.00

36

-2.21%

-10.20%

0.60%

22.22%

901-1000

46

$978.00

49

38

$971

42

39

$969.00

48

0.72%

16.67%

0.93%

2.08%

1001-1200

98

$1,127.00

56

98

$1,127

53

97

$1,138.00

35

0.00%

5.66%

-0.97%

60.00%

1201-1300

70

$1,275.00

58

99

$1,277

75

71

$1,277.00

37

-0.16%

-22.67%

-0.16%

56.76%

1301-1400

85

$1,368.00

56

77

$1,372

72

74

$1,380.00

33

-0.29%

-22.22%

-0.87%

69.70%

1401-1500

110

$1,480.00

63

83

$1,479

62

112

$1,481.00

36

0.07%

1.61%

-0.07%

75.00%

1501-1600

65

$1,576.00

65

45

$1,570

81

64

$1,582.00

44

0.38%

-19.75%

-0.38%

47.73%

1601-1800

101

$1,722.00

61

57

$1,722

57

80

$1,725.00

44

0.00%

7.02%

-0.17%

38.64%

1801-2000

50

$1,921.00

60

36

$1,917

59

38

$1,945.00

39

0.21%

1.69%

-1.23%

53.85%

2001-2200

21

$2,133.00

47

13

$2,152

35

10

$2,135.00

51

-0.88%

34.29%

-0.09%

-7.84%

2201-2500

13

$2,357.00

62

14

$2,364

84

13

$2,354.00

52

-0.30%

-26.19%

0.13%

19.23%

2501-2750

17

$2,641.00

48

12

$2,629

59

5

$2,625.00

25

0.46%

-18.64%

0.61%

92.00%

$2750+

10

$3,158.00

46

5

$2,800

17

5

$2,905.00

29

12.79%

170.59%

8.71%

58.62%