Our clients often tell us that their sole focus right now is to cut down vacant days on market (DOM) and start signing more leases. The “DOM” metric has been increasing across the board as of late, and there are a number of factors at play.
Is The Great Relocation Over?
The migration of the U.S. population out of places like the Northeast or Illinois or California into states like Arizona, Texas, Florida, and Tennessee has been well-documented. This migration is generally attributed to the pandemic when remote work provided the freedom to choose where you lived.
We were surprised to read that the number of moves, in general, has actually decreased over the last 5 years. We found a pair of data points that provide some nuance to this finding. According to this article in Forbes:
- In 2021, 8.4% of Americans moved – down from 11% in 2017
- In 2021, 3.3% of Americans moved across state lines – up from 1.5% in 2018
My conclusion is that while moving, in general, has slowed over the last 5 years, big moves increased dramatically. So that left us to wonder – since everyone has made their big move, are they settled?
Another interesting data point came from CoreLogic. They looked at the average distance from the home purchased to the nearest metro center, and here is a key chart:
This distance seemed to peak in 2021 when people were moving away from metro centers to take advantage of more space, the ability to work remotely, etc. But that trend seems to be reversing its course.
The Number Of Available SFR Homes Increased in 19 of 20 Markets
In a recent study by our PlanOlabs team, we studied the number of single-family rental (SFR) homes available online every month through the latter half of 2022 in 20 key MSAs across the country. We found that the number of available SFR homes increased by 61% on average between June 2022 and December 2022 (see chart).
Note that in this time period, Hurricane Ian hit the Fort Myers area so it makes sense that the number of properties listed online did not increase for that market.
Compare this trend with Multi-Family Rental Properties available online over the same period, and we saw a 46% increase for those same markets:
Rentals Available Have Increased by 49% Since Q2 2022
When considering both Single Family Rentals and Multi-Family, we saw a significant increase in the average number of rental homes available between Q2 2022 and Q1 2023 (see chart below). In Q1 2023, there are 49% more rental homes available compared with Q2 2022 – this is a massive increase in competition for your vacancies, inevitably leading to an increase in vacant days on market.
Summary For Your Investor
If your investor is putting pressure on you to reduce vacant days on market, be prepared with a few data points:
- Just 8.4% of Americans moved in 2021, compared with 11% in 2017
- Interstate moves jumped to 3.3% of all Americans in 2021, compared with 1.5% in 2018
- The average distance between Home Purchased and Nearest Metro Center appeared to peak in 2021
- The number of SFR homes available online increased by 61% between June 2022 and December 2022
- The number of rental homes available online (both SF and MF) has increased by 49% between Q2 2022 and Q1 2023
If you need help making your vacant rental homes stand out against the increased competition, consider the findings from this study.