SEATTLE, Feb. 4, 2020 /PRNewswire/ -- While many
renters aspire to be homeowners and are saving toward that
end, others choose renting as a lifestyle choice, saying it better
suits them or makes them more able to chase career
opportunities.
But the cost to move into an apartment depends a lot on
where you live -- and who you are.
Nearly 9 out of 10 renters pay a security deposit, for example,
but fewer than two-thirds pay an application fee. And while
deposits are similar across demographic groups, younger renters,
renters of color and those in the LGBTQ community are more likely
to pay application fees, which also vary by home type and location,
according to the most recent Zillow® Group Consumer Housing Trends
Report.
Those fees typically run $50 per
application and may include a background and credit check to assess
financial risk. The average renter who is moving applies to more
than three rentals.
While there are a variety of reasons people prefer to rent, many
do because their finances dictate that they must. The median
household income for renters is $37,500, half of the $75,000 annual income of homeowners. And only
half of renters say they could afford an unexpected $1,000 expense, compared with 80% of
homeowners.
Those financial constraints mean that even those who might
see eased mobility as a virtue of renting could also see that
mobility hindered by upfront costs. It can be especially difficult
for renters trying to decide between absorbing a rent increase
beyond their budget or paying upfront costs to move. Indeed, 35% of
renters say paying the upfront costs is their greatest hurdle to
securing a new rental.
Landlords charge urban and suburban tenants application fees at
higher rates than their rural counterparts – likely a response to
more competitive rental markets in cities and suburbs. And there
are regional trends, as well: Renters out West and down South are
more likely to pay an application fee (71% and 68% do,
respectively) than those in the Midwest (56%) or Northeast
(54%).
A renter's race also is predictive of whether they will pay an
application fee: 56% of white renters pay one, compared to 73% of
Latinx and Black renters, and 84% of Asian renters. Even when
controlling for urbanicity (renters of color are more likely to
live in urban markets), the disparity persists. Other variables
like LGBTQ identity contribute to the probability of an application
fee: Cisgender and heterosexual renters are less likely to pay one
(63% do) than LGBTQ renters (73% do). When controlling for
variables like age, income, home type, urbanicity, and region,
LGBTQ renters are more than 1.4 times as likely to pay an
application fee, and renters of color are more than twice as
likely.
Security deposits are more uniformly required, Zillow's survey
shows, with the typical deposit being $600. Renters in typically larger single-family
homes are more likely to see higher deposits, with a median of
$850 and nearly 40% paying at least
$1,000. But they are least likely to
pay an application fee, with about half doing so. Renters in
multifamily buildings who pay a security deposit, by comparison,
typically pay $500. But multifamily
renters are more than 1.2 times as likely to pay an application fee
than single-family renters.
"Renting a home provides flexibility to move more easily,
whether for a new job, changing family circumstances or any number
of other factors. But that flexibility isn't free," said Zillow
chief economist Skylar Olsen.
"Renters face a number of upfront costs, including application fees
and security deposits, that can often run into the thousands of
dollars – and not all groups of renters will feel these costs
equally. There are sound economic reasons why renters in different
places would pay different upfront costs to rent a home, as
landlords try to cover the risks of unpaid rent, unexpected
repairs, or surprise vacancies. But the potential for
discrimination against certain renters, whether overt or
unintended, cannot and should not be discounted. Examining the
different paths renters take to securing a home – and the different
costs paid to get there – can help to identify blind spots where
the market fails to provide a level playing field."
The 2019 Zillow Group Report on Consumer Housing Trends is the
4th annual largest-ever survey of U.S. home buyers,
sellers, owners and renters, and asked 13,000 U.S. household
decision makers aged 18 and older about their homes – how they
search for them, pay for them, maintain and improve them, and what
aspirations and challenges drive their decision. Data from the full
report is available for free to the public at
www.zillow.com/report, and custom analyses are available to
journalists by emailing press@zillow.com.
About Zillow
Zillow® is transforming how people buy,
sell, rent and finance homes by creating seamless real estate
transactions for today's on-demand consumer. Zillow is the leading
real estate and rental marketplace and a trusted source for data,
inspiration and knowledge among both consumers and real estate
professionals.
Zillow's proprietary data, technology and industry partnerships
put Zillow at nearly every major point of the home shopping
experience, helping consumers search for and get into their new
home faster. Zillow now offers a fully integrated home shopping
experience that includes access to for sale and rental listings,
Zillow Offers®, which provides a new, hassle-free way to buy and
sell eligible homes directly through Zillow; and Zillow Home Loans,
Zillow's affiliated lender that provides an easy way to receive
mortgage pre-approvals and financing. Zillow Premier Agent
instantly connects buyers and sellers with its network of real
estate professionals to help guide them through the home shopping
process. For renters, Zillow's innovations are streamlining the way
people search, tour, apply and pay rent for leased
properties.
In addition to Zillow.com, Zillow operates the most popular
suite of mobile real estate apps, with more than two dozen apps
across all major platforms. Launched in 2006, Zillow is owned and
operated by Zillow Group, Inc. (NASDAQ:Z and ZG) and headquartered
in Seattle.
Zillow and Zillow Offers are registered trademarks of Zillow,
Inc.
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SOURCE Zillow