- The rental market is more expensive for people of color from the housing search to lease renewals.
- Renters of color pay an extra $294 on average just to lock down a unit, according to Zillow.
- The pricier searches come from heftier application fees and security deposits.
In a rental market rife with record-breaking price hikes and historically low vacancy, renters of color are having the hardest time of all.
Black, Latin, and Asian Americans face much tougher hurdles in today's rental market than their white peers, according to a new report from real-estate giant Zillow. By having to pay larger application fees and security deposits, renters of color have to fork over an extra $294 on average just to secure housing.
The disparities emerge as soon as the rental search begins. White renters pay a median application fee of $50 and typically submit two applications, according to the report. Yet median application fees swell to $65, $80, and $100 for Black, Latin, and Asian American renters, respectively.
Black and Latin American renters also tend to send three applications on average, leading to even higher upfront costs.
Once an application is approved, renters of color are still paying more to move in. While white renters pay a median security deposit of $600, Latin American renters shell out a median deposit of $650. That sum swelled to $700 and $1,000 for Black and Asian American renters, respectively. White renters are also the least likely to have to pay a deposit at all, with just 85% having to do so. More than 90% of renters of color, meanwhile, have to pay a deposit, according to Zillow.
The cost gaps are making an incredibly tight rental market that much harder to access. Prices grew a record 16.2% through 2021 and accelerated again to a year-over-year pace of 17% in February, according to Zillow data. The national vacancy rate is also the lowest its been since 1984, leaving landlords in a strong position to hike prices and offer little in the form of special deals.
Relief isn't likely to arrive anytime soon. The pandemic fueled a boom in demand for homes, but with prices now sitting at historic highs and inventory still in short supply, more prospective buyers have been forced to stay in the rental market. That's bolstered rental demand in a market that didn't see much new construction in the years after the Great Recession, Nicole Bachaud, an economist on Zillow's research team, said in a separate report published on March 17. The imbalance between rental supply and demand is set to keep prices soaring higher even as the Federal Reserve looks to cool inflation.
"It's going to take some time for inventory to rise enough to help curb runaway price growth, even as builders are working feverishly to get new construction on the market," Bachaud said, adding that rising mortgage rates could "discourage some homeowners from selling" and further prop up rental demand.
And while prices have increased across the board, renters of color are still running into pricier renewals. Forty-one percent of Asian American renters said they experienced a price hike at their previous rental before moving out, according to Zillow. That share rose to 56% for Black renters and 63% for Latin American renters. Just 38% of white renters faced such price increases.
The rental experience for people of color is more expensive from beginning to end, and with economists not seeing a major crash on the horizon, the path to a more sustainable market is set to be a long one.