Blog Post

2022 Wrap-Up & 2023 Predictions for Property Managers

Written byextwpusr

01/11/2023

As the year has wrapped up and 2023 is full speed ahead, it is the right time for property management companies to gain an overview of emerging market dynamics and start planning for the future

The broad property management industry includes a variety of segments that all have the potential for growth, such as STR (short-term/vacation rental), long-term single and multifamily operators, PropTech, and more. While most professional managers focus on a single vertical, some adventurous types are able to find success across these verticals. In order to set yourself up for success, as a property manager, you should focus on key indicators to grasp upcoming growth opportunities in the market.

To help you understand the current state of the industry and what you should expect in the next year, we have discussed the emerging industry trends with Extenteam leaders and asked for their predictions for 2023.

A Broad Look at 2022 Property Management Industry Trends

Currently, the property management industry in the US alone generates in excess of $99 billion in annual revenue and is expected to grow even more. Though the expected market expansion seems promising for operators to grow their business and ROI, there are significant fluctuations in the market, such as increasing operational costs, workforce deficit, wage inflation, and customer demand. 

Let’s take a closer look at how these factors impact the market today and get insights from Extenteam leaders.

1. Increasing Wage Inflations and Workforce Deficit Complicated Finding and Retaining Team Members

Maintaining a property management business is a demanding job. Property managers need highly skilled team members on board to ensure the quality of their operations and guest or resident satisfaction.

The worker churn remains high in the property management market.

Since 2019, wages for the accommodation sector have increased by over 23% and worker churn remains high at a historical rate of 6.8%, which makes HR, recruitment, and staffing by far the most urgent challenges for property managers in today’s market.

While inflation rates remained high in 2022, staffing rates also increased. According to the Bureau of Labor Statistics, employer costs for private industry workers averaged $27.44 per hour worked for wages and salaries and $11.47 for benefits in June 2022. Increasing wages coupled with continued local talent shortages made it increasingly difficult for STR property managers to keep up with their staffing demand.

According to a Clutch survey, 90% of small US businesses outsourced a business process in 2022, a 10% increase from 2021. Also, a 2022 report by Bloomberg revealed that 80% of companies in North America, like the United States, were actively considering nearshoring. In 2022, Extenteam utilized the nearshore market for the first time and provided team members from Mexico to its partners.

Today’s property managers need effective staffing solutions like outsourced staffing to attract and retain qualified team members, improve operational efficiency, and maximize profit.

During 2022, Extenteam was able to fill staffing needs for STR managers by providing top-tier talent and saving them an average of $25,000 per staff member per year.

We Help You Find the Right Talent to Deal With All Your Operational Needs 

While You Focus on Expanding & Scaling Your Business!

2. Demand in the Property Rental Market Is Increasing

In 2022, global inflation increased from 4.7% to 8.8%, which resulted in higher interest rates than expected. This shift translated into expanded mortgage rates and rising home prices. 

One result is that in today’s hot housing market, selling or buying a house is more challenging than ever. 

The demand in the rental market is expanding

As house prices increased, people started looking to rent homes instead of buying. In fact, to keep up with the long-term rental demand in the multifamily and single family rental market, the US needs to build 600,000 more long-term rental properties.

The increasing demand for long-term rentals is promising. Still, with more renters that work from home, residents have started to prioritize lifestyle amenities and better experiences. This means the responsibility of property managers has risen to provide residents with better services to increase their profit. 

A study shows that 29% of residents are planning to relocate to a rental community with better amenities when their leases expire, which means to stay competitive, managers need to focus more on improving their operations.

The US multifamily/traditional rental industry experienced a record increase in average rents year-over-year from 2021 to 2022 at 14.07%.

3. The Definition of Guest Experience in Vacation Rentals Is Changing

Providing a customer-centric experience is critical for vacation rental operators to keep occupancy and average daily rates up, get better guest reviews, and increase the number of repeat bookings.

Setting and managing  guest expectations  is more and more challenging. With the emergence of the COVID-19 pandemic and increased cost of living, the way guests work, live, vacation, and rent has transformed. 

Today’s STR customers are seeking out additional benefits with the cost advantage. They prioritize the safety and cleanliness of a rental more than ever, look for more individual and digitalized experiences, and focus on traveling more sustainably. 

The first half of 2022 was still a growing bubble for the STR industry, but the momentum toward consolidation cooled as private equity fueled companies hit the brakes and some hit the wall in the second half of the year. Lots of questions arose around buyer behavior. Is traveling back for good? Do travelers prefer vacation rentals or were they a haven for COVID fears? STR property managers still found themselves struggling to fill positions and retain employees, especially for entry level, guest facing roles.

Short-term rental managers must understand the guest expectations in the market, stay up to date accordingly, and improve the quality of all operations throughout the guest journey.

4. Technology Remains a Key Factor for Operational Efficiency)

The emergence of the COVID-19 pandemic led property managers to digitalize their guest and resident services. Therefore, operators began to utilize PropTech technologies,  emerging in the industry as property management software options, IoT, and AI, all of which create opportunities to improve the effectiveness of their operations and guest satisfaction.

The real estate industry is already embracing new technologies, like drones and virtual reality, in the PropTech market. To attract buyers, developers are incorporating residential technology into their buildings, allowing residents to access things like smartphone payments, connected appliances, intelligent security systems, and even automated parking. These high-tech buildings will keep residents happy, improve real estate sales, and attract buyers who want the newest tech at their fingertips.

2023 Predictions From Extenteam Leaders

So far, we have evaluated the trends in the property management market with experience-packed insights from our leadership team. Now, let’s take a look at their predictions for key segments in the industry.

1. The War for Talent Will Continue

Between late 2020 and early 2021, the global service industry experienced a great resignation movement, narrowing talent pools in all industries. Today, the great resignation is over by all accounts. Still, the workforce in the accommodation sector remains smaller and better paid. 

This situation indicates that the war for talent will remain a reality for the hospitality industry in 2023, and operators will need to find a way to recruit and retain highly skilled team members to grow their business without compromising their competitive edge.

The economy is predicted to remain relatively the same in 2023 and I expect the same demand for highly efficient skilled labor for STR managers throughout the US. Extenteam will continue to establish itself as the industry leader in providing highly skilled, efficient, cost-effective outsourced talent to STR and MF managers.

75% of companies have reported talent shortages and difficulty hiring – a 16-year high. Since it’s time-consuming to upskill in-house teams, more companies are outsourcing different roles to a vendor. By outsourcing to a skilled vendor like Extenteam, a company can instantly access the expertise it lacks in-house. Demand for specialist knowledge is at a record high and Extenteam will continue to add more specialized roles to its roster in 2023.

2. PropTech Adoption Will Accelerate

It is clear that PropTech products and services will add even more value to guest and resident services in the near future. In fact, the PropTech market size is expected to account for $86.5 billion in 2032, advancing at a CAGR of 16.8% during the forecast period. Therefore, both Proptech start-ups and property managers will be looking for qualified software developers to add value to their operations.

Providing streamlined communication and improving efficiency and security of data management will be key to lowering operational costs and expanding profit and productivity. 

As the world becomes more technologically driven, we will see that the property management industry will change rapidly. To stay ahead of this curve, managers will need to stay up to date with the technology shaping the future of the market. For the next decade, PropTech technologies, like AI, virtual reality, augmented reality, SaaS, blockchain, and IoT, will be transforming the rental landscape, people’s search for housing, and their investments. This transformation will surely affect the software developer demand in the market.

3. Short-Term and Long-Term Managers Will Have to Adapt to Changes in Affordability and Demand

Due to increasing house prices in 2022, next year, the rental market is likely to experience a steady demand. The real challenge will not be about satisfying demand– it will be about offering affordable options, because as the cost of living increases, potential guests and residents will be looking for cost-saving rentals.

This situation might force managers in the industry to keep prices of lease renewals and offerings low to avoid pricing out reliable and potential guests or residents. 

Therefore, throughout 2023, keeping efficiency high to prevent costly operations will be key to managers offering a price advantage to their guests and residents.

With increased mortgage rates, affordability of home ownership in the US is expected to fall to the lowest levels since the 1980's. This is a leading indicator of increased demand for rental housing. Rental rates are expected to be stagnant as the current rates are pushing the upper ceiling of affordability, with MF operators cutting costs to improve profits, rather than being able to increase rents. Extenteam is well positioned to offer great value to property managers as each Extenteam outsourced team member saves $25,000/year for its clients.

4. Outsourced Staffing Will Remain a Competitive Advantage

From decreasing operational costs to reaching a wider talent pool and providing a better guest or resident experience, outsourced staffing has numerous benefits for property management businesses. Because of the value it represents, outsourcing at least a portion of an operator’s staffing becomes a crucial trend to rely on for a competitive advantage.

The very competitive property management industry will keep improving profits by utilizing off-shore staff via outsourcing firms. For the first time in history, Global Talent Utilization (staff outsourcing) became a profit benchmark utilized by the National Association of Residential Property Managers (NARPM).

2023 will see more need for outsourced staffing and employers will see the value in new models for remote staff that includes building a positive company culture of reward, inclusion, and shared mission across distributed teams.

Extenteam Is Here to Help!

With more than 15 years in the property management industry, we help our partners in the short-term rental, multifamily, and PropTech industries reach their full potential through a strategic and effective approach to outsourced staffing. 

As the #1 trusted outsourced staffing provider worldwide, Extenteam is more than ready to lighten your HR workload and help you meet and keep qualified team members on board. 

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