Renters Nationwide Finding Themselves In Bidding Wars
Renters across the country are finding themselves embroiled in bidding wars for available apartments and rental houses, adding another pressure point to skyrocketing housing costs.
In some cases, renters are getting outbid by competitors willing to pay more than the monthly asking rents, MarketWatch reports. The Los Angeles Daily News published a story of one woman who paid a full year's rent upfront for a five-bedroom home in fear of being outbid a third time for a place to live in Southern California. A renter in Philadelphia lost a unit because another bidder was willing to pay $500 over asking rent, The Philadelphia Inquirer reported.
“Renters are being left with few options but to meet higher rents and, in some cases, even offer above asking — whether they can afford to or not,” Realtor.com Chief Economist Danielle Hale said in a press release. “Rents are not only maxing out renters' housing budgets but are the biggest strain on their overall finances, even as inflation drives up expenses across the board.”
After repricing one rental unit by more than $300/month to nearly $1,600, Atlanta Re/Max Town and Country attorney Bruce Ailion told Realtor Magazine the property still had more than 600 inquiries and 300 applications.
“That means we were under-priced for the current climate,” Ailion said.
The state of affairs is being driven by a lack of housing supply across the country, which is pushing rents up more, despite a recent deceleration of rent growth. Multifamily vacancy hit a record low of 2.3% in the first quarter, according to CBRE.
Median one-bedroom monthly rents in the U.S. reached $1,414 in May, up 12.8% from a year ago, while two-bedrooms exceeded $1,750, up nearly 14%, both all-time highs, according to a recent Zumper report. One-bedroom rents in the 10 most expensive markets in the U.S. all exceeded $2K, with New York achieving monthly rents of $3,590, according to Zumper.
The rental pool also has added would-be homeowners to the mix in recent months, amid housing prices expected to rise nearly 11% this year, rising mortgage rates and a lack of supply of entry level-priced homes.
“The influx of higher-income households into the rental market is driving up rents, potentially reducing the ability of younger and lower-income adults to form renter households,” the Harvard Joint Center for Housing Studies wrote in a recent report, according to MarketWatch. “The question now is whether there will be a sufficient supply of affordable and available housing to prevent this outcome.”