2023 Top Property Management Trends and Challenges to Look Out For
The Emergence of the Property Management Industry
The glamor of the real estate profession might have led you to believe that property management is a new wealthy field. But the truth is that property management has been here for ages. Yes. The concept of property management has been here since ancient times. Back in the day, aristocratic landlords used to have someone dedicated to looking at their properties.
Throughout history, the property management industry has witnessed various changes. Many people started migrating to cities in the nineteenth century for better opportunities. As a result, the demand for housing increased, and landlords felt the need for property management services. However, property management emerged as a full-fledged industry in the early twentieth century. The industry started with aristocratic landlords. Now it is a well-established industry with a range of services such as property buying and selling, rent collection, maintenance, background check of tenants, etc.
Types of Property Management Services
Property management services come in different forms, so you can actually select the one that you want and that fits within your budget. Some firms might provide you with a one-stop solution for all your property management needs, whereas others will provide you with specialized services. Some of the most common services offered by these firms are:
Residential Property Management
You can hire residential property management services to manage single-family homes, apartments, townhouses, etc.
Commercial Property Management
You can hire commercial property management services to manage accommodations like hotels, restaurants, malls, etc.
Industrial Property Management
You can hire industrial property management services to manage manufacturing facilities, warehouses, etc.
Special Property Management
You can hire special property management services to manage schools, temples, theaters, etc.
Emerging Trends in Property Management Industry
Like any other industry, the property management industry is transforming. Different market trends are influencing the property market at different times. To understand the property market better, we must be aware of various factors influencing the market. The market trends can be categorized into two categories, namely macro and micro trends. You can learn more about these property management systems and trends below.
Macro Trends in Property Management
Some of the macro trends influencing the property management industry at large are as follows:
- Urbanization Continues to Affect the Property Management Industry Positively
Urbanization is unstoppable. It is the most influencing factor affecting the property management industry. Rapid urbanization leads to a rise in rental properties, which means more job creation for property managers. As a result, due to urbanization, the property management industry expects to see a surge in demand for their services.
- The Property Management Industry is Facing Sustainability Allegations
The real estate industry is responsible for over one-third of the world’s carbon emissions. Landlords increasingly face pressure from the concerned authorities to practice more sustainable ways. As a result, the property management industry is gradually shifting towards more sustainable practices.
- The Property Management Labor Market is Worsening
Property management is a very demanding job. Property managers are always available to landlords and rarely have a personal life. However, nowadays, people prioritize work-life balance, due to which people would prefer to avoid taking property management roles. As a result, the property management industry faces a skilled labor shortage.
- Inflation Rates have Affected the Property Management Industry
Inflation has decreased the value of money. Due to this, real-estate prices have skyrocketed, but the wage rate has remained the same. As a result, people now need help to afford real estate. Thus, in this way, inflation has negatively impacted the property management industry.
- Government Restrictions are Likely to Play Role
Property rental prices have skyrocketed. Due to this, an average person can no longer afford to pay rent. The only way for the government to control the situation is to do rent controls. Thus, the government is likely to interfere in the property management industry.
B. Micro Trends in Property Management
Some of the micro trends influencing the property management industry at large are as follows:
- The Property Management Industry has Witnessed an Increase in Demand for Single Family Homes.
Back in the day, apartments used to be a thing. But nowadays, the preference of people has shifted to single-family homes. As a response to this, the property management industry is also going to focus more on single-family homes.
- The Property Management Industry is Becoming More Competitive.
Nowadays, the barriers to entry in the real estate industry are comparatively low compared to previous days. Due to this, new firms with innovative ideas are giving tough competition to the existing firms. As a result, the property management industry has become more competitive.
- Property Management Firms are Getting Better at Marketing
Due to the intense competition in the property management industry, firms are forced to improve their marketing. The industry is shifting to new innovative marketing strategies in the digital space.
- The demography of the People Seeking Property Market is Shifting.
As of 2023, more and more Gen-Z population are renting houses. And Gen-Zs are one of the hardest customers to please and retain. In this regard, the property management industry is expecting to witness major macroeconomic shifts in the industry.
- Location Preference of the People Seeking Property Market is Shifting
COVID-19 forced us all inside our houses. Due to this, most people started working from home. People renounced their fast-paced downtown life and opted for a more peaceful life outside the city. As a result, the property management industry has seen a sudden surge in the demand for rental properties in suburban areas.
Challenges in Property Management Industry
The property management industry took a serious hit during the COVID-19 pandemic. This industry has yet to recover from the negative repercussions of the pandemic fully; it is already dealing with inflation. The rising housing prices harm the real estate industry more than good. Thus, struggling to recover from COVID-19 and rising inflation are the biggest challenges for the property management industry.
Similarly, lack of skilled labor, increasing maintenance costs, damage to the property, bad tenants, etc., are other challenges the property management industry faces.
Is Property Management Service Worth It?
Lastly, the million-dollar question. Is paying a certain percentage of your rental income to a property manager worth it, especially in this economy? Because property management services are costly. Spending thousands of dollars on property management services might sound worth it for some and ridiculous for others. Thus, this question comes down to your requirement and budget. If you have many rental properties, taking the services from a property management service is worth it. However, you can do without such services if you have only a few rental properties and are confident in your abilities to take care of them properly.
Although the property management industry is rapidly growing, it faces challenges. The market indicators may be discouraging due to various external factors, but eventually, this industry will bounce back. Property management services truly add value to the lives of modern-day landlords. As a result, a modern-day landlord cannot imagine their life without property managers.