Findings from Zillow’s Consumer Housing Trends Report show that renters of color typically submit more applications — and pay more application fees — before finding housing than white renters. Tenants of color also typically pay a higher security deposit when they move in.
The U.S. rental market is as competitive as it has been in decades, with the national vacancy rate lower than at any time since 1984. Rent prices have soared to a record 17% in the past year alone, prompting some overpriced tenants to look for a more affordable home when their lease expires.
About nine in 10 renters paid a security deposit last year, with the typical deposit being $700. A higher share of renters of color paid a down payment (93%) than white renters (85%), and the median amount paid by renters of color was also higher — $750, versus $600.
“Rents rose last year more than any year on record, forcing many tenants to seek a more affordable option. About two in five tenants who moved in the past year said a rent hike had influenced their decision to move,” said Manny Garcia, population specialist at Zillow.
“Renters don’t typically have much of a financial cushion, and the cost of finding a new place to live can be a costly burden. Unfortunately, renters of color are especially susceptible to rising rents and, when they purchase a new lease, they typically report higher upfront costs, limiting the mobility that is often seen as a benefit of leasing.
A $750 security deposit is a significant chunk of a typical renter’s wealth. Zillow research indicates that a typical renter holds a total of $3,400 in savings, checking, retirement and investment accounts. More than a third (38%) of renters surveyed say they couldn’t cover an unexpected expense of $1,000.
In addition to facing higher and more frequent security deposits, renters of color report submitting more requests and paying higher fees for those requests than white renters. In 2021, 61% of all renters requested two or more properties – an increase of 11 points from 2019 and five points more than in 2020, likely due to the tight rental market.
The typical white or Asian American and Pacific Islander tenant submits two applications, while a black or Latinx tenant typically submits three. More than a third of renters of color submit five or more applications when looking for accommodation: 38% of Black and Latinx renters, 33% of Asian American and Pacific Islander renters and only 21% of white renters.
With a median rental application fee of $50, the cost can add up quickly if tenants need to apply for multiple properties. The burden is often greater for renters of color, who report paying higher median application fees than white renters, in addition to generally having to apply for more rentals.
Among tenants who paid an application fee for the home they are renting, the typical white tenant reports paying $50, while a typical black tenant paid $65, a typical Latinx tenant paid $80, and a typical tenant of Asian and Pacific Islander descent paid $100.
The higher fees and number of applications for renters of color are likely partly attributable to their age, income and geography. The typical renter of color is two years younger than the median white renter, which means two years less of potential revenue growth.
White renters are also more likely to rent in rural markets and in the Midwest, which are generally cheaper. Asian American, 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.
Expanding access to credit could help improve outcomes for Black and Latino renters. Nearly half of white renters (46%) say they are completely sure they will qualify for a rental, compared to 38% of Latinx renters and 34% of black renters. Credit checks are part of many rental applications, and Black and Latino adults are more prone to being credit-blind and more often live in counties with higher levels of credit insecurity.
Tenants looking to control application fees may have options. For a flat fee of $29, renters can use Zillow’s online rental app to apply through Zillow for an unlimited number of participating properties within 30 days.
The online application includes a credit report and background check, which saves landlords time when screening potential tenants and provides them with the information they need to feel confident with each candidate. Renters can also provide additional context and explain any negatives in their rental and credit history.