Rental Bidding Wars?
If you have experienced bidding wars buying a home…get ready for them when you’re trying to rent
So, you have probably heard that buying a home has become harder and harder for first-time and low-income buyers. You have probably also seen an increase in values for homes all across the country. Values have increased 21% in the area I live during the last 12 months. In all likelihood, during the last couple of years, you have also probably heard and read about the bidding wars happening all across the nation on buyers making offers on homes for sale. But had you heard about rental bidding wars?
Rental bidding wars?
I first heard this from a family member looking to rent a flat in London, UK. The term flat is what we call a condo or apartment in the United States. In any case, my relative was told “How much are you offering to pay for rent?” The landlord had more offers, and of course, he or she was going to rent to the highest bidder.
Had you heard about rental bidding wars?
Back in the U.S. Recently, another relative was looking for a home to rent in Austin, Texas. He was told he needed to apply before he even saw the property! Yes. Submit an application. Before you see the property. Of course, I am sure if that property was not to the person’s liking, he or she could cancel. But, come on! That is just one step towards coming to the point of bidding on a rental, in my opinion.
The New York Magazine just published an article on “What Landlords are Thinking about the Real Estate Boom” in the Real Estate section. Kim Velsey writes that in New York City there are bidding wars going on now for rental property, “Desirable apartments receive hundreds of inquiries.” This is a city where a studio with one bath is asking for $3,750 in rent. A note if you want to read that article, you get one chance per month for a free article before the paywall comes up.
Now, back to my turf. Another issue for renters is the increase in rental dues. The media in Central Florida reports “Central Floridians find themselves facing huge rent increases of 20% to 40%” I know of a person living alone, renting a 2 bedroom apartment, who had a $500 increase in her rent, that’s a 38% increase.
So, my thoughts are, in areas of the country where rent is cheaper, say Florida, there is going to be a much higher influx of people from cities like New York, where rent is definitely higher. Therefore, the folks in Florida who already are finding it difficult to find a place to rent at the prices they used to pay, are now going to compete with people who are used to paying higher rent already, who are going to outbid them.
“Central Floridians find themselves facing huge rent increases of 20% to 40%”
Don’t blame only the bidders
Bidders will be outbidding lower-wage earners at every corner during the next few months. But don’t blame only them. Landlords are rising rent prices everywhere. From corporate-owned apartments to individual condo and home investors, it seems they are all increasing rent when the lease is up. One reason landlords give is the setback they suffered in 2020 during the pandemic. During that bleak period for the U.S. and world economy, many renters stopped paying their rent. There was also a bottleneck in getting government rental assistance in many counties throughout the country. But that’s a topic for another day.
Is Buying a Home Cheaper than Renting?
With rent going up, it seems buying a starter home is cheaper than renting. That is if you can find a starter home to buy. Because that, my friend, is like finding gold in California during the “gold rush.”
All over the country, there is an urgent need to have affordable housing available for people to buy or rent. The lack of properties available has occurred due, in part, to the real estate market crash of 2008. Many construction companies and builders went bankrupt which led to a lower output of residential properties coming on the scene.
The pandemic has also had a more immediate effect on the real estate market. Possible home sellers had to stay put for two years which has made values rise to values that are now unreachable for first-time and low-income buyers. A throng of corporate investors have swooped up a high percentage of the properties going on the market, which has also influenced values.
Though home values differ across the country, the National Association of Realtors reports that “May 2022’s median existing-home sales price of $407,600 represents a 14.8% increase from one year ago.”
In Florida “The statewide single-family median sale price in April was $410,000, up 21.8% from the previous year,” reports the Florida Association of Realtors.
These are some facts I’m putting out there. I have no solutions but I see there is a critical need to solve this predicament. Some suggest making changes in zoning and land-use policies. Author M. Nolan Gray suggests in his book Arbitrary Lines that zoning has made America’s cities unaffordable, inaccessible, segregated, and sprawling.
Others, like the National Association of Realtors, recommend the White House “consider stronger measures to create additional residential units, such as tax incentives to convert the unused or underutilized commercial property to affordable housing or condominiums, and tax incentives to increase the supply of construction workers.”
The Federal Government released a comprehensive Housing Supply Action Plan in May with the aim of improving the national housing supply within five years.
I write about a lot of things. Real Estate is my passion and my profession. These years are challenging for people to put a roof over their heads. Let’s see what the future brings.
