Finding a place to rent is harder than anytime since 1984 as the low number of available units means that each available unit is receiving multiple applicants. While the Fair Housing Act prevents discrimination based on race, sex, nationality, or religion, minority renters still face additional scrutiny during the application process by way of having to submit more applications than average and higher security deposits when they land a unit.
This data comes from Zillow through their 2021 Consumer Housing Trends Report, which surveyed over 2,000 renters on their experiences applying for and securing a place to live over the course of the year.
As a whole, the typical renter who moved in the last year is a white 33-year-old in a 2-bed, 2-bath apartment between 500 and 999 square feet. Two-thirds of renters (65%) are under the age of 40 and 56% are white or Caucasian.
But as rent prices continue to rise (17% last year according to Zillow), so are application fees and security deposits, adding additional cost burdens to buyers who are already financially stressed. But even then, those stressors are not applied evenly across the board.
According to Zillow’s research, renters of color submit more applications—thus paying more in fees—than their white counterparts and also pay more for security deposits after landing a unit.
Renters typically do not have the financial cushion that a homeowner would have; the typical renter has $3,400 in total across their checking/savings accounts and retirement or investment accounts. One third (38%) reported that they could not afford a surprise expense of $1,000.
9-in-10 renters paid some sort of security deposit in order to move in, with the average deposit costing $700, which is a significant portion of the typical renter's wealth. 93% of minority renters reported paying a security deposit, while a lesser 85% of white renters paid a security deposit before moving in.
“In addition to paying higher and more frequent security deposits, renters of color report submitting more applications and paying higher fees for those applications than white renters. In 2021, 61% of all renters applied for two or more properties—an 11-point increase from 2019 and five points higher than in 2020, likely owing to the tight rental market,” Zillow said. “The typical white or Asian American and Pacific Islander renter submits two applications, while a Black or Latinx renter typically submits three. More than one-third of renters of color submit five or more applications during their home search: that’s true of 38% of Black and Latinx renters, 33% of Asian American and Pacific Islander renters, and only 21% of white renters.”
Again, application fees for renters can quickly add up when some renters are applying at multiple places. Zillow found the median application fee cost $50. Among renters who paid an application fee for the home they rent, the average white renter reported paying $50, while Black renters paid $65, Latino renters paid $80, and Asian American and Pacific Islanders paid $100.
“The higher fees and number of applications for renters of color are likely partially attributable to their age, income, and geography. The typical renter of color is two years younger than the median white renter, meaning two fewer years of potential income growth,” Zillow said. “White renters are also more likely to live in rural markets and the Midwest, both of which are generally less expensive. Asian American and Pacific Islander and Latinx renters, in particular, are more likely to rent in the West, which includes many of the country’s most expensive and competitive rental markets.”
Zillow suggests that expanding access to credit could alleviate some of these problems for minority renters. Credit checks are part of many rental applications, and Black and Latino are more prone to being “credit invisible” and more often live in counties with elevated levels of credit insecurity.