8 trends that property managers believe will shape the industry in 2022 [Research]

For the most up-to-date information, check out our latest post on property management industry trends for 2023.

In 2021, waves of transformation swept across the property management industry, seemingly coming from every direction. Property management companies have been challenged to absorb the impact of labor and material shortages, increasing regulations, industry consolidation, and the housing affordability crisis. They’ve faced an increase in demands and expectations from their residents and clients, as well as the threat of competition from the institutional investors and management firms flooding into the single-family rental sector.

But property managers have confronted each of these issues head-on by providing the exceptional customer service that has always brought them success, and by adopting new technologies to get more work done with fewer resources.

In this article, we’ll share property managers’ opinions on the forces that they believe will shape the industry in the year to come. We’ve organized their thoughts—gathered through this year’s Property Management Industry Survey—into 8 themes, accompanied by our research on how each trend has impacted property managers since the start of the pandemic, and how they continue to influence their businesses today. We hope that this research will not only help you to set your strategy for the year ahead, but also remind you that the challenges you’ve endured over the last two years are shared by thousands of property managers across the country.

2022 Property Management Industry Trends:

1. Increased Interest in Single-Family Rentals
2. Consolidation in the Property Management Industry
3. Increased Regulation of Rental Properties
4. The Value of Property Managers’ Services & Expertise
5. Property Managers’ Shifting Customer Relationships
6. Rental Demand & Housing Affordability
7. Supply Chain Delays & Labor Shortages in Property Management
8. PropTech Adoption During the Pandemic

1. Increased Interest in Single-Family Rentals

Interest in single-family rentals and suburban neighborhoods has skyrocketed due to their ability to grant renters more living space at more affordable prices than they can find downtown, without the need to qualify for a mortgage. With people of all ages finding themselves shut out of the competitive housing market, they’re on the hunt for rentals that can accommodate their evolving needs and preferences, and they may remain in the rental market for longer than previous generations. Though the surge in interest has also created some competition between small-business property managers and larger investment and management firms, smaller companies’ ability to provide personalized customer service will continue to differentiate them from larger competitors.

How This Affects Property Managers

Effect #1: More Pandemic-Driven Interest in Spacious, Affordable Rentals

Property managers are fielding greater interest from renters in properties that provide increased indoor and outdoor space at more affordable price points. Though renters’ interest in single-family properties and suburban neighborhoods had begun to tick up prior to the pandemic, their demand for these properties has greatly accelerated over the last 18 months, particularly with remote work enabling some residents to move farther away from city centers. For example, within the population we survey, the share of renters living in single-family properties has risen from 32% to 37% since 2018; and the share living in suburban and rural neighborhoods has increased from 56% to 63%. We expect strong demand for single-family rentals to continue as Millennials work remotely and welcome partners, kids, pets, and relatives into their households, requiring more space; and as Baby Boomers look for homes where they can comfortably age in place without the stress of homeownership.

In Property Managers’ Words:

• “One aspect [of the pandemic’s impact] is less desirability for apartment living vs. the suburbs, although I do think that the next generation of young people will come back to the cities for economic opportunity and social activities.” (San Francisco, CA)
• “Work-from-home tenants will likely want to upgrade the size of their home space—e.g. [moving] from studio to one-bedroom.” (Phoenix, AZ)
• “Tenants [are] looking for outdoor space as a high priority.” (Charleston, SC)

Effect #2: More Interest in Single-Family Rentals from Large Firms

As the popularity of single-family rentals grows exponentially, some property managers are feeling the impacts of an influx of institutional investors, developers, and property management firms within their local markets. Build-to-rent communities are being constructed in markets across the country, competing with single-family properties scattered throughout existing neighborhoods, and serving as a major driver of the asset class’ current success. However, the vast majority of rental properties in the U.S. remain in the hands of small-portfolio rental owners who will continue to turn to local property managers for their expertise and assistance in running these properties effectively, profitably, and in compliance with changing regulations.

In Property Managers’ Words:

• “[The pandemic has] increased the number of properties held by a small group of large players.” (Sacramento, CA)
• “Industry giants developing SFR [communities] for leasing only will have a long-term effect on our business.” (Las Vegas, NV)

2. Consolidation in the Property Management Industry

Property managers are watching the industry consolidate around them, with investment dollars  pouring into the single-family rental sector, and the hot housing market motivating some small-portfolio investors and property managers to sell off their properties. However, this presents an opportunity for property managers to grow their own portfolios through acquisitions of smaller companies and investment portfolios.

How This Affects Property Managers

Effect #1: More Investors in Property Managers’ Client Base

Since 2018, the share of investors in property managers’ client base has risen from 67% to 71% as many Accidental Landlords have chosen to sell off their rental properties. Many of these units have been acquired by investors, raising questions about the potential impacts on the rental market of consolidation in property ownership—for example, the transformation of naturally occurring affordable housing owned by mom-and-pop landlords into market-rate housing owned by investment firms. However, as we mentioned, small-portfolio investors continue to own the vast majority of small rental properties in the U.S.

In Property Managers’ Words:

• “I feel that the rental freezes essentially scared the type of first-time investors that didn’t really understand the risks involved in investment property ownership. By that, I mean the type of buyer that stretched themselves too thin in order to purchase, but never understood that a property could sit vacant for periods of time, or need substantial repairs, or a pandemic may come and freeze that revenue flow. This isn’t necessarily a bad thing, as these owners were always the last to spend money on repairs, upgrades, or preventative maintenance. So this led to a [slight] uptick in properties being snatched up in the area by seasoned investors who do pour money into upgrades in order to keep their properties competitive against others on the market, as well as get the highest and best use in terms of what they make in rent.” (New Orleans, LA)
• “Ultimately, there are [fewer] people able to purchase houses at this time between the market, the recession, and general effects of COVID. This has solidified the need for the rental market even further—however, there will be [fewer] individual owners that only own a few houses because there is more risk their tenants cannot pay. It will become even more of a monopolized market!” (Lexington, KY)

Effect #2: More Opportunities to Grow Through Acquisitions

Rather than adapting to the fast pace of change required of property managers and investors in the current market, some are selling off their portfolios. This creates opportunities for others to expand: 25% of property managers plan to grow via acquisitions of other companies’ or investors’ portfolios over the next two years.

In Property Managers’ Words:

• “Many older companies have left the market, offering properties for sale.” (Manhattan, KS)
• “Most companies are [not] able to grow, so they are selling or consolidating.” (Denver, CO)

3. Increased Regulation of Rental Properties

Property managers worry that the appeal of investing in residential rentals has been hurt by the regulatory burdens and financial struggles small-portfolio owners faced during the pandemic, and as a strong seller’s market makes property sales an attractive option. But most rental owners plan to hold onto their properties over the next two years, and many even plan to expand their portfolios.

How This Affects Property Managers

Effect #1: More Regulation Means Heightened Risk for Rental Owners

Property managers are fielding concerns from rental owners on the risk involved in running rental properties in the current era. In response, they’re providing invaluable expertise on how to operate profitably and in compliance with new regulations.

In Property Managers’ Words:

• “More governmental regulations proposed and implemented has driven small-time landlords to hire professional management or sell. It has consolidated the market. It has also caused us to be more discerning and make fewer exceptions to whom we rent.” (Olympia, WA)
• “With the pandemic and new laws that impact rental property owners, we feel our owners have leaned on us more for our expertise and staying up-to-date with the changing laws.” (Fayetteville, AK)

Effect #2: Residential Rentals’ Appeal Persists, Despite the Seller’s Market

Some property managers have found their portfolios contracting as the hot housing market motivates rental owners to sell off their properties. But a majority of rental owners continue to see residential rentals as a smart investment. In fact, according to our most recent survey of small-portfolio rental owners, 46% plan to acquire new properties in the next two years—the most significant plans for growth we’ve seen in this population since 2017.

In Property Managers’ Words:

• “Some clients intend to hold onto their investment for life, no matter what the changing market holds for them. For them, we are valuable and will never lose our worth. Our role has not changed at all. For other clients, we feel that our role has changed and we are only helping transition their properties from a mediocre rental to a sellable house. They intend to sell as soon as the time is right.” (Eugene, OR)
• “Some rental owners are getting out of the business due to unfavorable financial outcomes related to the pandemic-mandated moratorium on evictions. At the same time, there are fewer homes for homebuyers, creating a seller’s market. For landlords who are able to flip their own properties and sell them to end buyers right now, this could make up for some of the losses they sustained in the last 18 months.” (St. Louis, MO)

4. The Value of Property Managers’ Services & Expertise

The pandemic has shined a spotlight on the value of property managers’ services, particularly amidst rapidly shifting regulations and local market conditions. 3 in 5 property managers believe that their clients see more value in their services today than they did prior to the pandemic; and they’re noticing an increase in demand for their professional expertise, above and beyond the duties they’ve traditionally fulfilled.

How This Affects Property Managers

Effect #1: More Regulatory Anxiety Means More Reliance on Property Managers

Rental owners are becoming increasingly reluctant to self-manage their properties in the face of increased regulations and resident-related issues. As a result, we’ve seen an increase in the number of rental owners who work with a property manager to run their properties, rising from 55% before the pandemic to 64% during the height of the crisis, and stabilizing at 61% in mid-2021. In particular, 25% of rental owners who currently work with a property manager say that they primarily do so to ensure that their properties are being run in compliance with current regulations.

In Property Managers’ Words:

• “We’ve seen an increase in business as more investors prefer to use management companies as opposed to navigating regulations and tenant situations themselves.” (Phoenix, AZ)
• “I think that landlords have a much better understanding of how important a professional management company is to the success of their investments.” (Birmingham, AL)
• “People are going to see property management as a need, not something that they can leave behind to increase their revenue.” (Miami, FL)

Effect #2: More Investor Clients Means More Interest in Expertise-Based Services

Investors are increasingly looking to property managers as trusted advisors on local market conditions and effective rental property operations. As a result, property managers are experiencing greater demand for expertise-based services, with the number of rental owners seeking services like financial, investment, and legal advice increasing by 7 percentage points since 2019.

In Property Managers’ Words:

• “[Rental owners] have relied on us more heavily to keep our finger on the pulse of their properties and tenants as well as the industry.” (Billings, MT)
• “My clients, as well as potential clients referred by other realtors, have increasingly turned to me for advice prior to purchasing a property to determine the viability of that property as an investment property.” (Provo, UT)

Effect #3: More Resident-Related Issues Means More Work for Property Managers

Property managers’ ability to attract and retain great residents has become a key component of their value in rental owners’ eyes. In our most recent survey, 48% of rental owners reported that they hired a property manager primarily because they needed help managing their residents—an increase of 6 percentage points in the last year alone. Property managers are leveraging tenant screening to verify that renters have stable sources of income, and they’re crafting watertight leases to protect rental owners’ interests when evictions are restricted.

In Property Managers’ Words:

• “[We’re placing] greater emphasis on tenant screening [and collecting] larger security deposits to mitigate any unexpected crises.” (Tampa, FL)
• “Clients are appreciative that we have selected great tenants who paid even during the pandemic.” (Modesto, CA)
• “[We’re using] shorter-term leases with new tenants until they prove acceptable for a longer term.” (Cleveland, OH)

5. Property Managers’ Shifting Customer Relationships

Property managers are expending far more energy toward their customer relationships than they did prior to the pandemic in response to increased demands from renters and rental owners. On property managers’ list of priorities, ‘attracting and retaining great residents’ rose from position #9 in 2019 to position #1 in 2021; and for third-party property managers, satisfying current clients and finding the right owners to work with was in position #3.

How This Affects Property Managers

Effect #1: More Time Spent Communicating with Residents & Clients

The uncertainty of the last two years has led to a significant uptick in the time that property managers spend communicating with and devising solutions for their customers. In particular, property managers have played a key role during the pandemic as a mediator between residents and owners, helping to balance their interests in the face of complex financial and legal challenges.

In Property Managers’ Words:

• “We have become much more closely involved in the goals of our landlords where their properties are concerned. We have also been placed in the middle of much turmoil and trauma due to the COVID mess. We have helped tenants apply for rent funds from the government and worked with others to stay current with their rent.” (Tampa, FL)
• “The pandemic increased our value tremendously as we became a liaison for all parties to keep up-to-date on the issues, laws, and best directions.” (Pensacola, FL)

Effect #2: More Requests from Renters Spending More Time at Home

Property managers have been fielding more incoming requests from renters as pandemic-related lifestyle shifts mean they’re spending more time at home, particularly due to the increase in remote work.

In Property Managers’ Words:

• “We are all being called upon for new issues with more residents being home for greater periods of time. More leaks, more resident-to-resident issues, and more projects being called for.” (Boston, MA)
• “Tenants are working from home more and demand more services, [so we’re] using more resources to run the property. They are also receiving [many] more delivery services and boxes to the buildings.” (Boston, MA)

Effect #3: Empathetic Customer Service Generates Customer Loyalty

Because they advised and supported their customers through the financial stress of the pandemic, many property managers feel that their relationships have grown more personal—resulting in more loyalty, but requiring even more empathy (and time) than before.

In Property Managers’ Words:

• “[The pandemic] has forced us to look at the way we manage and not take the resident for granted. We need to listen and understand, providing the best customer service possible.” (Albuquerque, NM)
• “I feel like my clients have a better understanding of the challenges I face every day in managing their properties and are more appreciative of my efforts than they were in the past.” (Durham, NC)

Effect #4: More Technology Doesn’t Have to Mean Less Customer Service

Since so many of their customer interactions have been digitized, property managers feel that finding opportunities to provide memorable customer service is key to differentiating their businesses from the competition. Technologies like property management software enable property managers to cut down the amount of time that they spend on recurring processes so that they can devote more energy to the aspects of their job that technology will never replace: their customer service and industry expertise.

In Property Managers’ Words:

• “Companies had to figure out how we could still manage and build relationships with clients and customers without being face-to-face.” (Missoula, MT)
• “[The pandemic] forced the use of technology to work remotely without compromising on service.”

6. Rental Demand & Housing Affordability

The increase in demand for rentals and shortage of affordable housing options are pushing up rent prices and increasing competition for available units in markets across the country. Though renters’ difficulty paying their rent has decreased significantly since the worst of the COVID-19 financial crisis, 10% of renters remained worried about their ability to afford their rent in our most recent survey. The pandemic may have made these renters’ financial struggles more acute, but in addition, housing price growth has outpaced wage growth for years. Though increased competition for rentals might seem like a good thing for property managers in the short term, high housing costs can ultimately lower rental demand by preventing lower-income workers from forming their own households.

How This Affects Property Managers

Effect #1: Greater Demand from a More Diverse Population of Renters

Property managers are seeing increased demand for their units from young renters forming new households and would-be homebuyers priced out of the market. Our annual surveys of renters have revealed that property managers are serving a more diverse population than in the past, with the number of older adults, children, and multigenerational families living in rental homes on the rise; resulting in a need for properties to suit the needs of a greater variety of occupants.

In Property Managers’ Words:

• “Due to economic hardships for certain people and generations, the rental market is at a high [level of] demand from people not being able to afford a house or [having no] interest in taking care of one. I foresee it continuing to grow long-term.” (Philadelphia, PA)
• “Skyrocketing rent prices and home purchase prices may make tenants stay longer if rent is kept relatively stable from year to year.” (North Port, FL)

Effect #2: Worsening Affordability Means Fewer Qualified Applicants

Property managers are spending more time wading through rental applications and screening prospective tenants as the strained supply of available units in many markets leads to greater competition among prospective renters. Some property managers are concerned about the impact that the pandemic has had on housing affordability and renters’ financial stability, and are having more trouble than usual finding qualified applicants for their units.

In Property Managers’ Words:

• “The supply and demand problem has made it difficult for people to find housing. Taking phone calls and replying to emails from potential tenants has been more important than ever.” (Springfield, MO)
• “Rent prices have been greatly affected [by the pandemic], and the credit scores of many individuals have been negatively impacted for them not being able to pay rent/been evicted.” (Chicago, IL)
• “Supply has been concentrated at the upper end of the market. Meanwhile, rising demand and constricted supply have reduced the stock of low- and moderate-cost rental units, leaving modest-income Americans caught in the middle.” (Dallas, TX)

7. Supply Chain Delays & Labor Shortages in Property Management

Labor shortages and snags in the supply chain are straining property managers’ ability to get work done quickly and cost-effectively, potentially impacting their customers’ satisfaction with their services.

How This Affects Property Managers

Effect #1: More Turnover Requires Better Employee Retention & Operational Efficiency

Property management companies are operating with smaller teams due to the labor shortage. As a result, they’re putting more effort into attracting and retaining employees, while also investing in technology to help them do more with less.

In Property Managers’ Words:

• “High inflation and lack of workforce has significantly harmed the industry. [We’re] having to pay workers double what they previously earned just to retain employees.” (Philadelphia, PA)
• “I believe automation will improve and we will need less people to do the work. We have learned to operate without a live front desk person.” (Wilmington, NC)

Effect #2: Material & Labor Shortages Threaten Project Timelines & Budgets

Property managers and rental owners are facing increased project costs and delays due to shortages in vendors, materials, appliances, and other necessary resources. This has impacted how quickly they’re able to address property issues and resident requests.

In Property Managers’ Words:

• “Tenant satisfaction is probably down due to lags in maintenance [with] not enough workforce to keep up with demand in a timely manner.” (Durham, NC)
• “Landlords have been waiting on payments from their tenants, yet [they’re] still having to pay for repairs, mortgages, etc. Now, we are faced with extensive time frames in which supplies for repairs are being delivered, at times causing property managers and investors to be in violation of landlord/tenant laws. If you can’t get a pump or tank for a well for one to two weeks, you still have to provide water to those tenants. Vendors can’t find helpers to stay caught up on repairs/jobs. The cost of repairs and materials have increased dramatically.” (Gainesville, FL)

8. PropTech Adoption During the Pandemic

From the very start, the pandemic has required property managers to digitize interactions that they were used to conducting face-to-face with customers, staff, and vendors. Even as shifting pandemic conditions have allowed some in-person interactions to return here and there, property managers are keeping the technologies in place that have led to greater efficiency for their teams, as well as greater convenience for their customers.

How This Affects Property Managers

Effect #1: Property Management Technology Enables Greater Operational Efficiency

Property managers have discovered just how much more efficient their operations can be with the right technologies in place, without compromising the level of service they provide. In 2022, 30% of property managers say that leveraging technology to improve their efficiency will be a key component of their revenue growth strategy.

In Property Managers’ Words:

• “As an industry, we’ve learned how to be contactless and work remotely. We now know how to serve our clients in a more efficient way and leverage technology to a greater extent.” (Chattanooga, TN)
• “Digital methods of payment, signing, communications, etc. are likely to see continued use to accommodate busy schedules.” (Baltimore, MD)

Effect #2: Widespread Technology Acceptance Among Property Managers’ Customers

Renters and rental owners have become increasingly amenable to technology as they see firsthand how much more convenient it makes processes like payments and communications. Customer-facing technologies like online payments, email and text communications, electronic rental applications and lease signing, and online maintenance requests are now favored by property managers’ clients as well as residents of all ages. Property managers agree that these technologies are here to stay, even as some face-to-face interaction resumes.

In Property Managers’ Words:

• “From a digital point of view, [the pandemic] has increased the ability and willingness for our clients and tenants to utilize more digital options that we have [been] urging them to use for quite a while. And the software that we already have in place has been making great improvements to make all of this easier for everyone as well.” (Denver, CO)
• “Even when the pandemic is over, I think our client base will not be willing to switch back to ‘normal.’ They will expect us to continue to provide the same online and convenient services, [which] we intend to accommodate.” (Eugene, OR)

Effect #3: Digital Leasing Technologies Reduce Time Spent on Recurring Processes

The pandemic has brought the leasing process online in a way that was previously unimaginable to property managers and rental applicants, reducing the amount of time and energy that property management teams need to devote to this area. Electronic rental applications, rental listings, and lease signing are now widely considered the industry standard; and emerging technologies like virtual and self-service showings have risen in popularity during the pandemic.

In Property Managers’ Words:

• “In the beginning of the season, folks were hesitant about getting pre-approved prior to receiving a showing appointment. We rented all but one home this season with a pre-approved rental application prior to seeing the house!” (Athens, GA)
• “We have seen a huge increase in people willing to sign leases without viewing properties. People seem more agreeable to online applications, payments, etc.” (San Antonio, TX)
• “More people are using self-access showings. We were already doing them pre-pandemic, but it showed the importance of them for our company and for the satisfaction of the applicants.” (Augusta, GA)

The 2022 Property Management Industry Report

The 2022 State of the Property Management Industry Report digs even deeper into the successes and difficulties that property managers have experienced over the last year, as well as the opportunities and challenges that they foresee for the industry in the years to come. Download your free copy of the report to learn the strategies that property management companies just like yours are using to run and grow their businesses in the current environment.