Metro Phoenix’s housing shortage is forcing tenants in some cases to pay hundreds of dollars in application fees just to find a place to rent, not including move-in costs such as a security deposit.
With apartment vacancies at a nearly 50-year low, some renters are applying to property after property before finding their next home.
Adam Berces, 39, and his wife have spent about $800 applying to about 10 locations in the West Valley since July, he said.
The couple had to ask their landlord to delay selling the El Mirage single-family rental home they’ve lived in for 12 years to give them more time to find a place.
“We’re desperate,” Berces said. “It’s getting nuts.”
None of the application fees are refundable, he said, and they don’t apply toward move-in costs.
“A lot of us don’t have the luxury of spending money we don’t have or that we need for our first and last month’s rent,” Berces said. “It’s knocking us down when we need a place to be.”
About 10 states have laws that restrict rental application fees, from banning them outright to requiring landlords to charge no more than the actual cost to run a background check, according to tenant screening company RentPrep. Arizona has no restrictions.
Application fees are not a profit generator for landlords, Arizona Multihousing Association CEO Courtney Gilstrap LeVinus said.
“Such fees are a necessity because they help rental property owners, which are typically small businesses, pay for necessities like background checks and credit checks,” she said. “Given that property ownership already has a very low profit margin of about a dime for every dollar of rent paid, they are a must.”
Valley’s rental shortage at highest point in decades
Even though Valley apartment construction is at a near-record pace, it’s not nearly enough to keep up with demand. Phoenix is the fastest-growing big city in the country, according to the U.S. Census.
As a result, metro Phoenix apartment vacancies are at about 3%, the lowest rate since the 1970s, according to Phoenix real-estate brokerage Colliers.
In response, the area’s average rent climbed 15% in the past year, almost four times the U.S. average, the company reported.
Single-family rental homes and condos are in short supply as well.
Valley home rents jumped 16.5% for the 12 months that ended in June, the highest increase in the nation, according to CoreLogic. It’s the biggest leap in Phoenix-area rent prices recorded by the data firm in at least two decades.
An exodus of landlords has exacerbated the rental crunch, according to LeVinus.
The combination of tenants failing to make payments during the COVID-19 pandemic, landlords unable to evict them because of government moratoriums and an attractive market for selling homes has led to a sell-off nationally.
“When mom and pop property owners and rental communities don’t get paid rent for 18 months, that is bound to reduce the number of available rental homes,” LeVinus said.
About one-quarter of single-family home landlords around the country said they had been forced to sell one or all of their properties during the pandemic and close to one third said they planned to tighten standards when evaluating future renters, according to an online National Rental Home Council survey of about 1,000 property owners.
“There is less rental housing in the United States today than there was five years ago,” the council said. “In 2020 alone, the amount of rental housing decreased by over 275,000 units.”
Valley homeowners also have worsened the rental shortage by opposing new projects.
Neighborhood backlash already scuttled one apartment development and is threatening two others in the West Valley that proposed a combined 1,570 units for households earning $27,000 to $51,000 annually.
Opponents stopped Scottsdale from developing 570 condos, and the new mayor wants to reduce building heights and density.
“Many cities and towns have begun to oppose plans for new rental homes, or create extremely difficult approval processes that hurt the supply side of the market,” LeVinus said. “When cities and neighbors scream ‘not in my backyard’ or give in to ‘NIMBY’ protests, that makes rental homes harder to find.”
It hurts the local economy and makes it harder for small businesses to stay afloat, she said.
“All in all, it’s a perfect storm in the marketplace for rental housing, which hurts renters and property owners alike,” LeVinus said.
Even ‘good’ renters have difficulty
Berces and his wife thought they would appeal to landlords as ideal renters.
They’re both employed, have a long rental history with no missed payments, have high credit scores and strong references and have been saving for a home down payment, Berces said. Maricopa County court records show no evictions.
Their income is at least three times the rent of the properties where they have applied, he said.
Berces is a caregiver for children with disabilities. His wife runs a game store for kids in Youngtown.
They can only guess that landlords consider risky their self-employment at the game store.
But of all the places they’ve sought to rent, no property managers have returned their calls or emails with clear denials. The couple just gets silence.
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“The word I’ve been using is deflated,” Berces said. “You get all excited. You find something affordable and available. You apply for it. You pay your application fee. And you wait a couple days and don’t hear back. So you call. I know I’m bothering them. They say they don’t know yet. You call and nothing, and send an email and nothing. You go from hope to deflated.”
A 2019 online survey of 3,000 U.S. renters by Zillow found about a third of renters had difficulty saving for move-in costs and up to a quarter struggled to get timely responses from landlords and property managers on rental applications.
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Application fees add up
A similar Zillow survey this year found application fees were higher and more commonly required for renters of color, younger renters, renters in expensive rental markets and renters in urban and suburban areas.
With application fees typically running $50-$90 — sometimes including fees for spouses, roommates and pets — the cost of searching can add up, Berces said.
“The credit card I’m using to charge these fees, it’s getting big,” he said.
Berces doesn’t know where he and his wife will go if their 30-day lease extension runs out without locking down a new place to live.
“It’s crazy for two business owners to be forced out because of this,” Berces said. “It is so stressful.”
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AUTHOR: Rebekah L. Sanders