Renters Locked Out Of Housing Market Push Apartment Renewal Rates To New Highs

Renters are increasingly choosing to stay put rather than venture into the unknown, where elevated home prices and broader economic volatility await.

Historically, about half of apartment renters choose not to renew their leases. In the first quarter of 2025, that number has dropped to between 30% and 35% in the portfolios of major multifamily landlords, according to Piper Sandler Managing Director of Research Alex Goldfarb.

Large multifamily REITs have reported some of the lowest turnover rates in their companies' history in recent calls with analysts, like Equity Residential, which reported a 7.9% turnover rate in the first quarter. 

“We've seen price growth still put a lot of burden financially on families and individuals across the country,” National Apartment Association Vice President of Research George Ratiu said. “With volatility and uncertainty, I think a lot of folks renting might choose to take what I would say is the certainty of rent over making a long-term commitment.”

Major REITs like Camden Property Trust reported a 31% annualized net turnover rate in Q1, one of the lowest in its history. Essex Property Trust said its turnover landed at 35%, below the company’s long-term average.

Marcie Williams, chief strategy officer of The Bainbridge Cos., which develops, acquires and manages multifamily properties nationwide, is seeing roughly two-thirds of tenants stay put at many of its communities.

“That [retention rate] is extremely high,” Williams said. “I've been in this business over 30 years, and that is definitely not typical overall.”

Since President Donald Trump's “Liberation Day” tariff announcement at the beginning April, price expectations and trade policies have seesawed, prompting fears of a trade war and heightening economic uncertainty. 

Consumer confidence plunged to a 13-year low in April, prompting many commercial real estate professionals to prepare for a recession. But that hasn't impacted apartment owners, and some see them as a clear winner in an environment with costs spiking. 

“There are a few stories of residents expressing concern due to job loss, but nothing at the moment that is impacting any of our stats, results or projections for the next 90 days in the market,” Equity Residential Chief Operating Officer Michael Manelis said on his company's first-quarter earnings call. 

Manelis said even in D.C. and Northern Virginia, where federal government job losses are having an outsized economic impact, Equity's complexes are more than 97% occupied.

But multifamily turnover has been shrinking for the past two years, driven by rising home prices, high interest rates and a shift in renter preferences toward more livable and amenity-rich spaces — a change that began during the pandemic, Goldfarb said.

Less than a third of renters are looking to buy a home within the next five years, according to a survey conducted by Gallup. The cost of homeownership, including the down payment, was cited as the biggest barrier for renters trying to break into the housing market.

“It’s really just the uncertainty with the economy and still the high barriers to entry, with higher interest rates and higher down payments, that has allowed our residents to be able to enjoy the service that we provide and the apartment home that they currently live in,” Williams said.

For landlords, that stability is a win. Lower turnover reduces operating and maintenance costs — typically ranging from $750 to $1,800 per unit — as well as marketing expenses and vacancy loss, since each unoccupied day results in lost revenue, she said.

“There really is nothing negative that comes from having lower turnover,” Williams said.

The bulk of move-outs and lease expirations occur in the spring and summer, Ratiu said, so lower turnover rates at the beginning or end of the year are more common. But turnover is expected to stay low during peak move-out season, even with new units continuing to come to the market, Goldfarb said.

After eight consecutive quarters of record apartment deliveries, completions have fallen from 153,000 units at the end of 2024 to 116,100 units in the first quarter, according to RealPage.

“This year is the second and final year of this outsized supply wave that we've seen, primarily in the Sun Belt,” Goldfarb said. “But last year, we had a big supply [increase], and yet turnover declined. So I don't see any reason why turnover should increase as the second wave of supply delivers.”

With fewer move-outs, owners of the new apartments that have come online are fighting to get in on the action and competing more aggressively for tenants.

That is driving up concessions on new leases, sometimes as high as two months of free rent and $1K gift cards, especially in Sun Belt cities like Jacksonville and Charlotte, Williams said.

“When those properties are 0% occupied, competing with an apartment community that's 95% occupied, they have to have those concessions to keep up the velocity and the velocity you know you want to make,” Williams said.

But deliveries are expected to fall 14% in 2025, according to Multi-Housing News, tipping the balance of power back toward landlords. With fewer new options coming online and renters growing hesitant to move out, prices are expected to start rising.

“The landlord goes, OK, how much do we think we can raise rent before we raise too much that the person just says, ‘The heck with it, I'm out?’” Goldfarb said. “And I think most people would agree that the mental cost of moving exceeds the actual dollar amount.”