So here’s a fun way to save on your rent: Don’t move. Ever.
According to a Zillow analysis of 2015 rental data, tenants who moved to a new apartment that prior year paid an average of $3,946 more in rent than tenants staying in the same unit for five years or more. That’s a whopping $329 a month, just in case you didn’t feel like doing math. And in major metros, the savings were even more dramatic. Renters in San Jose, Boston and good old San Francisco had the “most financial incentive” to keep their unit, saving close to $9,000 a year on rent just by staying put, Zillow found. San Jose residents actually had it the worst, with non-movers savings a total of $9,266 a year or $772 a month over their apartment-hopping counterparts. Zillow’s analysis is based on data from the U.S. Census American Community Survey (2015 is the most recent year available).
How does renewing a lease save so much money?
Blame the Great Recession (still), which caused rents to skyrocket almost 15% between 2005 and 2015 as homeownership plummeted. Blame luxury apartments, which made up a seriously disproportionate percent of new construction in 2015. Or institutional investors who keep buying up affordable-ish starter homes. Or millennials (it’s always millennials) who are finally moving out of their parents’ house, but can’t yet afford their own. Or maybe even blame rent-bidding apps. Bottomline, thanks to litany of supply and demand issues, market rate rents – the ones advertised to new renters – increased more than the rents offered with lease renewals. In fact, per Zillow, the annual market rate increase in rent from 2014 to 2015 was 5.6%. That’s a full two percentage points higher than the 3.6% increase for renewed leases within that same time period.
What’s a renter to do?
Consider staying put, obviously — at least until you’re ready to become a homeowner. Seriously. In some major metros, it’s actually cheaper to buy than rent. That assumes you’ve got a 20% down payment, good credit, and enough cash to cover closing costs, of course, but still. We’ve got some easy ways to save for a house while renting right here. If you absolutely must move — and let’s face it, sometimes relocation is the only option — you can keep your rent under control by getting a roommate, moving to a less pricey place (New York City is overrated anyway), negotiating, at least on items like application or pet fees, or considering a longer lease. As you likely guessed, contracts over 12 months tend to cost less in the long run. You’ll also benefit from shopping around for a good deal on renters insurance. That way, you’re not out money if your stuff gets damaged or you need alternate digs for a day or two. (Thanks, bursting bathroom pipes!) Remember, too, if you’ve got gripes with your current place, talk to your landlord. They just might fix ‘em — or negotiate a lower rent for your troubles. Good tenants are hard to find, you know.