The U.S. rental market is extremely competitive, with the national vacancy rate lower than it’s been in nearly 40 years. Rent prices are up a record 17% in just the past year. However, results from Zillow’s Consumer Housing Trends Report show renters of color typically face greater barriers to securing a place to live than White renters do. Renters of color not only submit more applications—and pay more in application fees—they also typically pay a higher security deposit when they move in.
Key findings:
- About nine in 10 renters paid a security deposit last year, with the typical deposit coming in at $700. A higher share of renters of color paid a deposit (93%) than White renters (85%), and the median amount paid by renters of color was higher, too: $750, compared to $600. A $750 security deposit represents a significant amount of a typical renter’s wealth. Zillow’s research indicates a typical renter holds $3,400 total across savings, checking, retirement and investment accounts. More than one-third (38%) of renters surveyed say they couldn’t cover an unexpected expense of $1,000.
- Nearly two-thirds (61%) of all renters applied for two or more properties in 2021, an 11-point increase from 2019 and five points higher than in 2020. The typical White or Asian American and Pacific Islander renter submits two applications, while a Black or Latinx renter submits three. Thirty-eight percent of Black and Latinx renters submit five or more applications during their home search, as do 33% AAPI renters. Conversely, only 21% of White renters submit that many applications.
Potential resolutions:
Expanding access to credit could help improve outcomes for Black and Latinx renters. Nearly half of White renters (46%) say they were certain they would qualify for a rental, compared to 38% of Latinx renters and 34% of Black renters. Credit checks are part of many rental applications, and Black and Latinx adults are more prone to being credit invisible and more often live in counties with higher levels of credit insecurity.
The takeaway:
“Rents grew more last year than any year on record, forcing many renters to look for a more affordable option. About 2 in 5 renters who moved in the past year said a rent hike influenced their decision to move,” said Manny Garcia, population scientist at Zillow. “Renters typically do not have much of a financial cushion, and the cost of finding a new place to live can be an expensive burden. Regrettably, renters of color are especially likely to experience rising rents, and when they shop for a new rental, generally report higher upfront costs, restricting the mobility that is often held up as a benefit of renting.”
To read the full report, see: Consumer Housing Trends Report
