They are usually reserved for homebuyers, but bidding wars are becoming more common in the rental home market. Demand for apartment and single-family rentals is surging and outpacing supply.
As the economy improves, workers are moving out of shared living situations and looking for their own homes. In addition, the housing market is so expensive right now that many would-be buyers are being priced out. That has them looking for rentals.
Some landlords are seeing more than a dozen applications for good properties – and renters offering well above the asking rent.
“We’ve been leasing property for almost 20 years, and we haven’t seen an applicant pool this competitive since we’ve started,” said Vipin Motwani, managing principal at Iron Gate Development in Maryland.
Motwani listed a Clinton, Maryland, home two weeks ago and had 20 prospective tenants go through it. He then received 10 applications, far more than normal. Given the stiff competition, renter profiles are now changing as well. Meaning, they have more money and better credit histories.
“The rental applications that we’re getting right now, you’re seeing higher credit scores, you’re seeing applicants willing to put down more in terms of security deposit, you’re seeing strong rental history as well. That wasn’t necessarily the case pre-Covid,” Motwani said.
Matt Van Slyke moved to New York City this weekend to start a new job. He toured about 15 apartments in two days after searching on apps like StreetEasy. He saw prices of the units he was looking at go up $300 to $400 just over the last two to three months.
“The one that I really wanted to apply to I was looking at with three or four other people in the tour. Before I got home, I immediately got my information together, applied, and it had already had applications put in,” he said.
He didn’t get it. And it was the one he really wanted.
Van Slyke then tried for another one that already had multiple applications and lost out on that one as well. He eventually settled for something pricier than he would have liked, a studio in Manhattan’s East Village, he said, since he felt a “time crunch” because of his job and “it just seemed like everything else was flying off the shelves.”
The rental applications that we’re getting right now, you’re seeing higher credit scores, you’re seeing applicants willing to put down more in terms of security deposit, you’re seeing strong rental history as well. That wasn’t necessarily the case pre-Covid.
Vipin Motwani
managing principal with Iron Gate Development
The intensifying competition is driving rents higher at a strong pace.
In July, rents nationally rose 7% year over year for one-bedroom apartments and 8.7% for two-bedroom apartments. That is up from 5% and 6.5% annual gains in June, according to Zumper, a national rental listing platform.
Some markets are seeing more demand than others. In the spring of this year, New York City saw its rent applications double compared with 2020, San Francisco saw a 79%…
Read More: Rental bidding wars heat up as economy improves in tight housing