2023 Rental Market Trends
4 Things to Watch in Rental Market Trends for 2023
Like many aspects of the U.S. economy, the rental market has seen unprecedented growth. The housing market, in general, has been especially strong, with homeownership costs soaring over the past year. This has caused prices to skyrocket across all aspects of the rental market. And although a slight decline in median rent was seen earlier this autumn, rental prices expect to remain strong throughout 2023.
Here are some other rental market trends both property managers and potential tenants should keep in mind for the coming year:
Record Inflation and a Continued Surge in Costs
As previously mentioned, rental prices have grown in markets across the country. This rental market trend is partly due to the record inflation the nation is experiencing. The costs of utilities, food, transportation, healthcare, housing, and more have all experienced double-digit inflationary pressures putting pressure on the American economy. Yet, even with this explosion in growth, the markets continue to flourish, leading to increased demand and even higher prices.
This rental market trend is expected to continue throughout 2023, with some analysts predicting a nearly 4% rise in price growth by mid-2023. Additionally, interest rates for those interested in purchasing a home and obtaining a mortgage will continue to rise, pushing more consumers into the rental market.
The Resurgence of Mixed-Use Rental Properties
Prior to the pandemic, mixed-use rental properties saw a rise in demand. Areas where renters shared space with entertainment venues, retail environments, and restaurants became increasingly popular as a rental market trend. Yet, as construction slowed during the height of the pandemic, the construction industry moved back to more traditional rental buildings.
Now, as the housing market continues unprecedented expansion, mixed-use developments have gained momentum with builders. Malls across the country have made a shift to now offering residential properties alongside retail and dining spaces. Even on a smaller scale, these types of properties have grown increasingly attractive to potential renters. Expect mixed-use properties to gain momentum throughout 2023 and into 2024.
Age Diversity in the Rental Market
Another trend being seen is that renters of all ages are eagerly entering the market. Both millennials and baby boomers are flooding the rental market looking for living spaces. This, in turn, has driven property owners to offer a range of features for their units. These can include ramps and ease-of-access accommodations to older residents, as well as cutting-edge digital communications to appeal to younger generations.
Single-Family Residences Still Reign Supreme
Single-family residences continue to be extremely popular with renters. Consumers interested in family-friendly environments, access to both indoor and outdoor areas, and convenient living spaces continue to drive single-family homes as a leading rental market trend. Single-family rentals are a great option for families, yet they also expose renters to potential problems if an economic downturn occurs. The increased cost of living in a single-family home leave renters particularly vulnerable to inflation.
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