If you’re signing a lease this month and the listing waves a free month at you, take it. Then read the next two paragraphs before you sign, because the way that discount is written determines whether you get a raise or a pay cut twelve months from now.
Apartment discounting is at levels nobody under 40 has rented through. RealPage put the average concession at 11.1% off asking rent on stabilized units in June, up 1.8 points from a year earlier and the deepest monthly discount in more than 25 years. That’s nearly six weeks free on a 12-month lease. Zillow, which counts listings rather than units, found 39.7% of its rentals carried a concession in June, up from 35.2% a year ago.
Meanwhile the sticker price went up. Zillow’s typical U.S. asking rent hit $1,965 in June, 2.2% higher than last year. Single-family rentals ran $2,320 and multifamily $1,789.
So which number is true? Both, and that’s the trick. Landlords hold the advertised rent up because the advertised rent is what sets next year’s renewal and the value of the building it’s in. Then they buy your signature with a one-time discount that never touches the number on the lease.
Put the two numbers together and you get the shape of the deal. Apply RealPage’s average 11.1% discount to Zillow’s typical $1,965 asking rent and you’re saving about $218 a month across a year, roughly $2,618. Real money, and you should go get it.
Now the part nobody puts in the listing. That discount expires with the lease. At renewal, you go back to paying the full $1,965 your lease said all along. Your landlord raised the rent zero dollars and your payment still jumped $218 a month. It’s an 11% increase that isn’t an increase, and it’s how renters get blindsided in month 13.
The fix costs you one sentence at the negotiating table. Ask for the concession as net effective rent, written into the lease as a lower monthly figure, instead of free months tacked on the front. A lease that says $1,747 renews off $1,747. A lease that says $1,965 with six weeks free renews off $1,965. Same money in year one. Different fight in year two.
Ask at renewal too, not just at move-in. Leasing offices market concessions to new tenants because they’re scored on filling vacancies, and a sitting tenant who never asks is free money. Say the word “concession” out loud and ask what they’re offering new residents in your building this month.
Your leverage depends on your ZIP code. Zillow found concessions on 67.1% of Charlotte listings, 65.9% in Denver, and 64.6% in Dallas. If you’re renting in one of those, you’re negotiating from strength and you should be embarrassed to accept the first offer. Years of apartment building did that, and Zillow senior economist Orphe Divounguy names the mechanism: “Supply is the most direct lever to keep rents in check over the long term.” You can watch that lever in the monthly housing starts data, where apartments have been carrying nearly all the growth.
One more piece of good news, and it’s the rare kind that points down-market. RealPage found the highest concession usage in Class C units, the older and cheaper stock, at 20.7%, ahead of Class B at 15.1% and Class A at 13.7%. The deals aren’t only in the buildings with the rooftop pool.
Before you sign anything, put the real monthly number into a budget planner twice: once with the concession, once without it. The second number is the one you’ll be living on next August. Plan for that one.
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