Metro Phoenix Renters Paying Hundreds of Dollars in App Fees

By Rebekah L. Sanders | Arizona Republic

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.”

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.”

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