BIDDING WARS ERUPT FOR RENTERS AS THE ECONOMY RECOVERS IN A HOT HOUSING MARKET

by | Oct 15, 2021 | Economic Factors, Housing Market Updates, Interest Rates

Key Points:

  • They are usually reserved for homebuyers, but bidding wars are becoming more common in the rental home market.
  • In July, rents nationally rose 7% year over year for one-bedroom apartments and 8.7% for two-bedroom apartments. Single-family rentals are also experiencing a surge in demand.
  • To offset losses from the Covid eviction moratorium, some landlords are raising rents on the properties they can, knowing that demand in the market will support the increases.

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.

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% increase in prospective renters, and Seattle experienced a 55% jump, according to RentCafe, a rental listing website. Meanwhile, Boston saw only a 5% gain, while rent applications rose 8% in Charlotte, North Carolina, and 9% in Portland, Oregon.

For single-family rental homes, the latest read from Corelogic in May showed rents up 6.6% year over year, which is nearly four times the annual increase seen in May 2020.

The coronavirus pandemic eviction moratorium recently extended, is also playing into the supply situation. As some landlords are unable to evict tenants who aren’t paying, they have less supply to offer those who can pay. To offset losses, some are raising rents on the properties they can, knowing that demand in the market will support the increases.