Bidding wars are growing more commonplace in the rental market as the demand for apartments and single-family rentals outpaces the supply.
“We’ve been leasing property for almost 20 years, and we haven’t seen an applicant pool this competitive since we’ve started,” Vipin Motwani, managing principal at Iron Gate Development in Clinton, Md., told CNBC. Two weeks ago, Motwani listed a home for rent in Clinton and quickly received 10 applications. He has found that renters now have more money to offer and better credit histories than applicants in the past. He says the latest tenants are willing to pay higher security deposits.
The improvement in the economy is causing some renters to move away from the shared households that they started during the pandemic. As housing prices have rapidly risen, that has priced out some buyers, prompting some to rent.
That added competition is prompting rental prices to rise further. Rents nationwide in July increased 7% annually for one-bedroom apartments and by 8.7% for two-bedroom apartments, according to data from Zumper, a national renal listing platform.
New York City has seen rent applications double compared to 2020. San Francisco has posted a 79% increase in applications and Seattle a 55% jump, according to RentCafe, a rental listing website.
Single-family rental homes have especially grown in demand since the pandemic as renters have looked for more space. Rents for single-family homes grew 6.6% annually, nearly four times the annual increase compared to May 2020, according to CoreLogic.
“Strong job and income growth, as well as fierce competition for for-sale housing, is fueling demand for single-family rentals,” Molly Boesel, principal economist at CoreLogic, said in a statement. She predicts demand for single-family rentals to continue to remain strong for the remainder of the year.