No matter what your local rental market looks like, the process of finding a place that works within your budget, timeframe and wish list can be a balancing act. Understanding the current market and typical search process can help you mitigate some of the stress involved.
Today’s rental market
In many metros, renting takes up more of people’s income than in past years, largely because demand for rentals often outpaces supply, driving up prices. Growing job markets – like the employment boom in the Seattle metro region – have contributed to a supply shortage.
The high demand contributes to the share of income spent on rent jumping to 29.1 percent nationally, according to a November 2017 study by Zillow Research, compared to an average of 25.8 percent between 1985 and 2000. While many areas hover around that 29 percent – like Chicago (29.7 percent) and Austin, TX (29 percent), or even below like Atlanta (26 percent) – renters are spending a larger proportion of their income on rent each month than they previously did in each of those metros.
Additionally, many renters are paying more than 30 percent of their incomes in rent. Los Angeles renters pay the highest share of their incomes at 48.4 percent, but even places like Portland, OR (32.5 percent), New Orleans (33.2 percent) and Miami (41 percent) eat up more of renters’ take-home pay than before.
While rents have jumped in the past decade, incomes have largely not kept pace. October and November 2017 did see income growth match rent hikes, but incomes did not match rents during most of the previous five-year period.
Not only do renters have to spend a larger share of their income to cover rent, they also often see their rent jump. Seventy-nine percent of renters who recently moved from a previous rental saw their rent jump prior to moving. Nearly six in 10 renters who have rented their current home for over a year (57 percent) have also seen their rent jump since they first moved in.
Beyond the cost of renting, renters should expect to act quickly. Unlike buying a house, which takes 4.3 months on average, renters search for an average of 2.6 months; one-quarter (26 percent) search for less than one month.
Managing your own expectations
In this challenging rental market, we recommend you enter your search with a full understanding of what you can afford. Not sure what that monthly figure looks like? Use a rental calculator to hone in on it, and don’t forget: Many landlords require first and last month’s rent as well as a damage deposit. As you apply, look carefully at any additional costs; they can differ depending on the landlord.
The first place you apply to – no matter how great it appears – may not be the one you move into. On average, renters make 4.5 contacts to landlords and turn in 2.5 applications. Look in neighborhoods adjacent to your original locale of interest to cast a wider net in your search.
When and how to use online tools
If you’re like most renters, you’ll be using online tools to find your next rental. While finding a rental online is far easier than driving around looking for an elusive “For Rent” sign, be cautious. If the advertised rent is several hundred dollars below the going market rate, the rental may be too good to be true. Almost one-third (32 percent) of renters indicate they had issues determining if a listing was legitimate.
Due to the growing number of online tools, expect landlords to get back to you quickly. Three-quarters (76 percent) of contacted landlords responded in a “timely manner” – which for 72 percent of renters is within a day.
As many renters complete their search and make initial inquiries online, how can you stand out to a potential landlord? First off, be prepared with all your paperwork (like recent pay stubs, bank statements, contact info for your employer and past landlord) when you apply. Additionally, try an easy, free tool like the Zillow Rental Profile to share your qualifications securely and give a landlord that great first impression.
Once you find a place
Most renters (68 percent) sign a 12-month lease. As you read through that lease, ensure you understand everything in the agreement. If a detail is not in writing, it’s not legally binding. Additionally, make sure you understand the financial penalties you may incur if you break your lease.
You should also be familiar with your rights as a renter. Renter rights differ on the state and local levels; make sure the ones you’re referencing accurately represent your situation.
Despite most renters using online resources to search for their new home, most leases are still signed in person (84 percent of renters). More than half of renters (53 percent) pay their rent in person or at a bank. To understand your payment options, talk with your landlord.
Finally, unless you’re planning on renting for the foreseeable future, prepare your next search ahead of time. The number one thing renters would do differently in searching for their new home is to start their search earlier to have more time (32 percent of renters). Put a reminder in your calendar about three months before your lease ends to help you start thinking about your options. If you do stay put, you may save money in the long run – landlords typically raise rents less often for renewing tenants.
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Source: Zillow Feed