Renters of color face higher application costs, survey suggests

Renters of color face higher application costs, survey suggests

Rising rents are forcing some renters to pack their bags to look for cheaper housing, but a new survey suggests renters of color may face additional costs when trying to find a new home.

A survey of 2,000 renters by online real estate marketplace Zillow suggests that renters of color tend to pay higher security deposits and apply more than white renters, likely in part because renters of color tend to be more young and rent in more urban places.

Within the survey, the average white renter paid $600 for a security deposit, compared to $700 for the average black renter, $650 for the average Latino renter, and $1,000 for the average Asian American/Pacific Islander renter.

A security deposit of $600 to $1,000 represents a huge expense for most renters, who typically have $3,400 in all of their checking, savings, investment and retirement accounts, according to Zillow. And in a sign of how many renters live paycheck to paycheck, more than a third of renters say they couldn’t cover an unexpected $1,000 expense, according to Zillow.

Black and Latino renters in the survey also applied for more properties before securing a home. The median number of applications filed by Whites and Asian Americans/Pacific Islanders was two, compared to three applications filed by the average Black and Latino renter. More than a third of renters of color submitted five or more applications during their housing search: that was true for 38 percent of Black and Latino renters, 33 percent of Asian American/Pacific Islander renters, and just 21 percent of white renters.

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Apply to more properties adds. People of color paid more upfront application fees: the median Asian American/Pacific Islander paid $100 per application; a typical black renter paid $65; a typical Latino renter paid $80; while a typical white renter paid $50.

“Renters typically don’t have much of a financial cushion, and the cost of finding a new place to live can be an expensive burden. Unfortunately, renters of color are especially likely to experience increased rents, and when looking for a new rent, typically report higher up-front costs, restricting mobility that is often delayed as a benefit of rent,” said Manny Garcia, a population scientist at Zillow, in a statement.

Zillow analysts suspect that the higher rates and number of applications for renters of color are likely partially due to their age, income and geographic location.

Renters of color were typically two years younger than the typical white renter, meaning they would have less time to build potential income and their rental and credit histories. While nearly half of white renters surveyed were confident that they might qualify to rent, only 38 percent of Latino renters and 34 percent of black renters had the same level of confidence.

White renters were also more likely to rent in rural markets and the Midwest, where the cost of living is less expensive. Meanwhile, Latinos and Asian Americans/Pacific Islanders were more likely to rent in the West, home to some of the most expensive rental markets, such as Los Angeles and San Francisco.

RELATED: Sugar Land and Pearland see steepest rent spikes in the Houston area

About two in five renters who moved in the past year said a rent increase influenced their decision, according to Zillow. Typical rents rose a record 17 percent nationally in February and about 13 percent in Houston. Typical rent in Houston rose about $165 to about $1,518 a month in February, according to Zillow.

Other sources suggest lower rents for Houston, with ApartmentList.com pegging median rents at around $1,210 for a two-bedroom apartment in February, but still up 11.5 percent year over year.

“Even if prices don’t rise as fast as they did in 2021,” analysts at ApartmentList.com said in a statement, “we are already seeing signs that this year will continue to deliver rental growth well above the previous year.” pandemic trend.

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