Renters of color pay higher upfront costs

Rhea-AI Summary

The rising costs of renting have disproportionately affected renters of color, according to a recent report from Zillow. Black, Latinx, and Asian American Pacific Islander renters face application fees 43% higher than their white counterparts. A significant 30% of AAPI renters report security deposits of at least $1,000, compared to just 17% of white renters. Zillow’s Consumer Housing Trends Report shows that Black and Latinx renters are nearly twice as likely to submit five or more applications, often incurring $50 fees per application. Zillow aims to alleviate these costs with an online application process, allowing renters to apply for multiple rentals for a flat fee. However, most renters (85%) still report paying security deposits averaging between $500 and $999, further straining their finances.

Positive

• Zillow's online application process allows renters to apply for multiple rentals for a flat fee, potentially saving them over $100.
• The universal application feature uses a 'soft' credit pull, helping renters protect their credit scores.

Negative

• Renters of color face significantly higher upfront costs, exacerbating financial strain.
• High application fees (averaging $50) and security deposits (often $500-$999) pose barriers to securing rentals.

Higher security deposits and more application fees add to an already stressful and pricey renting experience

• Black, Latinx and Asian American Pacific Islander renters report paying application fees that are 43% higher than those paid by white renters.
• 30% of Asian American Pacific Islander renters report paying at least $1,000 for a security deposit compared to 17% of white renters.
• Zillow allows renters to apply for an unlimited number of participating rentals for 30 days for a flat fee.

SEATTLE, April 6, 2023 /PRNewswire/ -- It's more difficult than ever to afford a rental after prices skyrocketed during the pandemic. With affordability as tight as it is, the upfront costs for renting are a major burden that could put the cost of moving to a new rental out of reach. Renters of color are more likely to report paying these upfront costs, and oftentimes, the fees are higher.

According to Zillow's Consumer Housing Trends Report¹, the typical Black, Latinx and Asian American Pacific Islander (AAPI) renter all reported spending $50 per rental application while white renters reported paying $35. In addition to the higher amount spent, Black and Latinx renters were nearly twice as likely to report submitting five applications or more before securing a rental. (Thirty-eight percent of Black and Latinx renters report submitting five or more applications, compared to 21% of white renters.)

"Monthly rent prices are nearly the highest they've ever been, and unfortunately for so many people, finding a place to rent comes at an even higher cost," said Manny Garcia, a population scientist at Zillow. "We so often hear about the benefits of renting and the flexibility it offers, but disparities persist, and many renters of color aren't granted the same mobility as others because of higher upfront costs."

Renters looking to lower the cost of application fees may have options. Zillow offers renters an online application process that provides renters with a single form they can use to apply to as many participating properties on Zillow as they'd like over a 30-day period for a flat fee.

Zillow data indicates that the average renter who used Zillow Applications in 2022 applied for at least three rentals. Considering the median application fee is $50 for renters who report paying one, Zillow's application process could save the typical renter applying to three or more participating properties more than $100. Additionally, our universal application feature offers just a "soft" credit pull, protecting renters from having their own credit score impacted by applying for an apartment.

Application fees are not the only upfront costs to consider. Once a rental is secured, nearly all renters (85%) report putting down a security deposit. In 2022, the typical security deposit reported was between $500 and $999. This means that for renters who are already struggling financially, such as the 38% who said they couldn't afford an unexpected expense of $1,000 in 2021, security deposits could be a significant obstacle to signing a new lease.

The burden is often greater for renters of color, who are more likely to report paying a more expensive security deposit: 39% of Latinx and 43% of AAPI renters paid at least $500 for their deposit, and 22% of Latinx and 30% of AAPI renters paid at least $1,000.

Given these affordability constraints, it's especially important for renters to be aware of their rights in the communities where they are searching. Zillow rental listings display available local legal protections, including source of income and LGBTQ+ anti-discrimination laws. While source of income protections do not currently exist in all 50 states, Zillow believes families who depend on alternative sources of income, including housing choice vouchers, should be able to secure a comfortable home, free from discrimination. Zillow strongly supports efforts to expand these protections nationwide.

About Zillow Group

Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate to make it easier to unlock life's next chapter. As the most visited real estate website in the United States, Zillow® and its affiliates offer customers an on-demand experience for selling, buying, renting, or financing with transparency and ease.

Zillow Group's affiliates and subsidiaries include Zillow®; Zillow Premier Agent®; Zillow Home Loans™; Zillow Closing Services™; Trulia®; Out East®; StreetEasy®; HotPads®; and ShowingTime+℠ , which houses ShowingTime®, Bridge Interactive®, and dotloop® and interactive floor plans. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org).

¹ 2022 Zillow Consumer Housing Trends Report. Zillow Group Population Science conducted a nationally representative survey of 8,300 unique renters — more than 2,500 recent renters and 5,700 tenured renters. The study was fielded between March and June 2022.

 

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SOURCE Zillow

FAQ

What financial challenges do renters of color face according to Zillow?

Renters of color face higher upfront costs, including application fees 43% greater than white renters and security deposits averaging between $500 and $999.

How does Zillow's online application process benefit renters?

Zillow's online application process allows renters to apply for an unlimited number of rentals for a flat fee, potentially saving them over $100.

What percentage of AAPI renters pay at least $1,000 for security deposits?

30% of Asian American Pacific Islander renters report paying at least $1,000 for security deposits.

How do application fees differ between racial groups according to Zillow's report?

Black, Latinx, and AAPI renters report average application fees of $50, while white renters pay an average of $35.

What does Zillow report about the number of applications renters submit?

38% of Black and Latinx renters submit five or more applications before securing a rental, nearly twice the rate of white renters.