Something unheard of is happening inside the housing market right now, rent bidding wars are sweeping the nation.
The housing market is a volatile one at present. Soaring prices that were further exacerbated by a pandemic-inducing housing boom pushed many people out. Then, rate hikes imposed due to excessive inflation have scared off even more potential buyers. This has led to an interesting phenomenon occurring nationwide. Rent bidding wars have begun to erupt in cities across the country.
Rent bidding wars are occurring as a result of a whole host of compounding factors. The Wall Street Journal detailed that one of the biggest things contributing to the rent bidding wars is the type of people who are looking to rent at present. There has been a massive uptick in the number of high-paid professionals looking to rent instead of buy. This has not only caused the demand for rental properties to soar, but because these folks are so financially stable they are in a position to offer landlords more than what they are asking for a property. Atlanta-based real estate agent Peter Beckford explained that many of the clients he is working with at present are “extremely well-qualified.” He shared that he recently rented a townhouse for $3,500 per month to a couple with a combined income of nearly $1 million annually. These people would normally not be looking to rent, but the nature of the market right now prompted them to choose to rent over buying.
A similar situation is playing out nationwide. Adrian Savino, managing director of the Living New York brokerage firm, disclosed that his firm is subtlety pushing clients to offer more than what landlords are asking. The competition is just as steep in Chicago. In Chicago, the rent bidding war is so competitive people are bidding on apartments auction-style via the website Brixbid. One Chicago couple told the Wall Street Journal that they were narrowly able to secure a townhouse in downtown Chicago after putting in a bid a whole $1,000 dollars more than the starting price of $4,000.
Some renters vying for apartments are even taking it a step further. With their applications, they are including letters detailing why they would be the best fit for a particular apartment. The rent bidding wars are so competitive that individuals are clamoring to obtain these apartments as they would attempt to attain a job. It’s unheard of.
The current market, where rent bidding wars are reigning supreme, is deeply concerning on so many levels. First, a flooded market is one that innately leaves some excluded. Second, more and more people on the lower end of the rent spectrum will be left with little to no housing options. That is a serious imbalance and one that could potentially result in dire outcomes such as homelessness.
Lastly, there remains an array of questions pertaining to the aftermath of this heated rental market. Will landlords, especially in major cities where the competition is always some level of steep, continue these rent bidding war practices when the market finally does cool down? How long will prices remain hyper-inflated? And what are the real repercussions of pushing so many potential renters out of the pool of applicants? Unfortunately, due to the unprecedented nature of this phenomenon, these are questions that do not yet have answers.