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nulondon.ac.uk

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2011

About Northeastern University

Northeastern University London (NU London) is a higher education institution. It delivers undergraduate and postgraduate degree programs that provide students with rigorous and in-depth study of their subject area while developing a range of transferable skills and gaining real-world experiences. It was formerly known as the New College of the Humanities. It was founded in 2011 and is based in London, the United Kingdom.

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58 St Katharine's Way Devon House

London, England, E1W 1LP,

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What are apartment bidding wars costing you?

Jan 10, 2024

Rent bidding is driving up costs for Boston-area residents.Ally Rzesa Editor’s note: Elijah Nicholson-Messmer, who graduated with his master’s degree from Northeastern University in December, reported and wrote this story, analyzed the data, and created the accompanying multimedia graphics for his capstone project. When Alexandra Stephanou and her partner started looking for a new apartment in February, “rent bidding” was something their friends had gone through, but not them. By the end of their search, it was a $1,200 reality. Stephanou, who had been living in the same North End unit since moving to Boston in May 2020, enlisted the help of a real estate agent to ease the process of looking for a new apartment. The agent “encouraged us to be aggressive” and said bidding wars were commonplace for desirable units. Advertisement “The message she was delivering was a harsh reality,” Stephanou said. “And mind you, this is early March and we’re trying to rent a Sept. 1 unit.” Despite the advice of her agent, Stephanou was not rushing to apply for any of the poorly maintained, often dirty apartments she toured, let alone bid on them. Then one Friday night, she saw an apartment — the apartment — pop up on Zillow. She contacted the listing agent immediately. The agent responded, telling her about the tour scheduled for two days later. There is a lot of interest, the agent said, so make sure to arrive on time. That morning, Stephanou and her partner arrived right at the scheduled time only to see “12 people with different brokers walking through the apartment.” As soon as Stephanou stepped into the apartment with the agent, she knew she wanted to apply. “This apartment was much nicer than the others that we had toured. It checked all the boxes for us.” “He gave us the information and told us to run home and apply,” she said. “So that’s what we did. We shuffled home really quickly, got all the paperwork done in a frenzy” and submitted it. Advertisement Then came the bid. [Landlord] just called. He received an application along with ours and they’re offering $3,500, $100 more than the asking price. He prefers to go with you, but wanted to see if you’ll take it for $3,500. Agent Thanks for the transparency. If we do $3,500 would that definitely include the parking spot? We’re happy to match that offer. Alexandra Stephanou Parking is $100 [extra] per month. I would do two tandem spots for $150 a month. Pet fee is $50 per month. Stephanou said she told the agent that “we didn’t want to get into multiple rounds of a bidding war and our budget was set.” He told her that bidding wars on rentals are pretty common, she said. Somewhat reluctantly, Stephanou and her partner agreed to match the other applicant’s offer. The one-bedroom, already listed for $3,400, was about to get even more expensive. All in, they paid $250 over the asking price — with a $100 bid, a $100 parking spot, and a $50 pet fee. Over their 12-month lease, that equates to $3,000 in unexpected expenses. Rent bidding gains foothold In the three months leading up to Sept. 1, 2023, when the majority of Boston-area leases start, 15 percent of all apartments were bid up from their list price, according to Multiple Listing Service records for Boston, Brookline, Somerville, and Cambridge. Properties that are rented off market are not included in the calculations. The exact locations of apartments are not given for tenant privacy. Tenants bid $177 over the asking price on average — more than $2,000 in additional rent over a 12-month lease. “Rent bidding” is defined as the difference between the listed and the actual rent. This is the best available measure, but it’s not perfect: The price difference could be explained by other factors, such as someone paying extra for an optional parking spot. Advertisement Stephanou and her partner, who landed an apartment on the Somerville-Cambridge line, were far from the only renters who bid above the asking price to secure their apartment. In Stephanou’s 02144 ZIP code, roughly 20 percent of the apartments rented for above the asking price. Rented for higher than list price Rented for lower than list price A look at the 02144 ZIP code, where 20 percent of the apartments rented for above the asking price.ELIJAH NICHOLSON-MESSMER/GLOBE CORRESPONDENT Tom McCauley, a 27-year-old tech worker, also found his apartment on the Somerville-Cambridge line. McCauley and his roommate had inquired about more than 30 units across Fenway, Somerville, and Watertown; toured six or seven apartments; and lost three bidding wars, often surrendering $25- to $50-dollar application fees. At their new two-bedroom apartment, the two pay $3,000 a month plus utilities, after bidding up from the initial $2,875 list price. “I’ve lived in the Boston area for four years,” McCauley said. “This is the first time I’ve ever experienced rent bidding. Some of my friends who have been here longer have also never experienced it, at least not at this scale.” Rented for higher than list price Rented for lower than list price A look at rent bidding along the Somerville-Cambridge line.ELIJAH NICHOLSON-MESSMER/GLOBE CORRESPONDENT, Mapbox Across Somerville, the opening of the Green Line Extension stops has driven up housing demand and costs, leading to more rent bidding here than in Cambridge and Boston. Rented for higher than list price Rented for lower than list price The opening of the Green Line Extension stops has driven up housing demand and costs, leading to more rent bidding. ELIJAH NICHOLSON-MESSMER/GLOBE CORRESPONDENT, Mapbox Although Somerville sees more rent bidding, the amounts people are offering over asking aren’t as severe as those in some neighboring communities. Neighborhoods like Chinatown, Roslindale, Dorchester, and Roxbury see some of the highest bidding. Apartments that were bid on in these neighborhoods went for 7 percent to 8 percent above the list price on average. On average, apartments that were bid on in Chinatown, Roslindale, Dorchester, and Roxbury went for 7 percent to 8 percent above the list price.ELIJAH NICHOLSON-MESSMER/GLOBE CORRESPONDENT, Mapbox Boston’s rental housing supply has lagged demand for years, but agents say the phenomenon of rent bidding emerged at this scale only after the city began its recovery from the pandemic. Advertisement A costly recovery Real estate agents point to a variety of factors behind the issue, including rising interest rates that are forcing would-be home buyers to remain in the rental market, the return-to-office push by employers, and a vacancy rate below 1 percent across Greater Boston as of Jan. 1, 2024, according to Boston Pads , an online rental marketplace. devin michelle bunten, 38, an assistant professor in the Department of Urban Studies and Planning at MIT said housing shortages, whether in sales or rentals, are at the root of hypercompetitive markets like Boston’s. Boston’s vacancy rate hit a multiyear high of nearly 8 percent in Sept. 2020, according to Boston Pads, but the number of available rentals has rapidly declined across the city, driving the vacancy rate to slightly below pre-pandemic numbers. The city’s tight market leaves many renters lining up, often literally, for a limited number of units. One way higher-income individuals, and low-income renters with roommates, could “try to jump the line is by offering above the asking price,” bunten said. The emerging phenomenon is a boon for landlords, some of whom may be using rent bidding to make up for revenue lost during the state’s six-month eviction moratorium back in 2020, said Sarah Doucette , a real estate agent at Rise Realty. Rather than simply increasing rent prices in unit listings, landlords may use rent bidding as a tool to learn just how much they can charge for an apartment in the current market, bunten said. Advertisement Standing out at any cost Rent bidding is not the only tactic Boston renters are forced to use to try to get an edge in a competitive market. In an online survey, one Cambridge renter said that while she did not bid on the rent price itself, she offered her agent $500 in cash on top of the standard fee to secure an apartment. In the survey, a Somerville resident said that, on top of offering an extra $150 a month on the listed rent price, she also created a “rental résumé” for her and her roommates, detailing references, hobbies, and job experience to strengthen their application, per her broker’s suggestion. Even high-earners like Stephanou have tried signing longer leases to reduce costs. “The whole experience just made us feel really fortunate that we have that type of income to pay for a place like this — as well as really discouraged about the housing market,” Stephanou said. “I don’t know how people can afford to live here who don’t have high-paying jobs. I don’t understand how families or low-income families do it.” Students bear the brunt Moritz Proell , 21, a junior at Northeastern, and his three roommates did not expect to pay over the asking price when they went apartment shopping earlier this year. “We were very surprised,” Proell said. Early in their search, an agent encouraged Proell and his roommates to bid above the asking price on an apartment in Fenway–Kenmore. After offering $200 on top of the $5,200 list price for a four-bedroom unit, another applicant outbid them. The agent asked Proell and his roommates whether they wanted to increase the bid again, but they decided it was too much for them. Moritz Proell and his roommates bid over the asking price on an apartment in Fenway-Kenmore and still lost.Moritz Proell The group soon found a four-bedroom unit in Mission Hill, but it was attracting interest from many other students. Determined to secure the apartment, Proell and his roommates offered $300 over the $4,500 asking price. It worked. “There was no second round of bidding,” Proell said. “We substantially outbid, I think, most of the competition.” Proell and most of his roommates get financial support from their parents, he said. “Otherwise, we would be unable to afford moving off campus.” Ranjita Singh-Ortiz , a partner and broker at Cambridge Premier Realty, said some undergraduates may get financial help from their parents, but many graduate students who participate in rent bidding are taking on extra loan debt to secure an apartment. Students and young professionals are often more willing to bid on apartments than other renters, but the practice is often prompted by landlords, Singh-Ortiz said. She said several clients she worked with were asked by landlords whether they would be willing to increase their offer — even after their application was approved and they had signed the lease. “That happens a lot,” she said. “It kind of boggles my mind, because, at that stage in a deal … the client thought that the property was off the market and it was a done deal — but it wasn’t.” The squeeze from rent bidding is maxing out some renters financially, Singh-Ortiz said. It’s also forcing others out of neighborhoods entirely. The rent eats first Neighborhoods with large Black and Latino populations like Roxbury and Dorchester have experienced some of the most severe rent bidding in Greater Boston. Bidding wars don’t pop up as frequently in these neighborhoods compared with the rest of the city, but when they do, renters end up paying 7 percent to 8 percent above the list price on average — amounting to thousands of dollars a year in additional costs. For Black and Latino residents, who are already disproportionally rent-burdened, keeping up may push them even closer to the brink. “Psychologically, they’re destroying us,” Lucia Guardado, a housing advocate who works with City Life/Vida Urbana to educate renters about their rights, said through a translator. To keep up with the rent at her Chelsea apartment, Guardado leaves for work at 4 a.m., returning home on public transportation 15 hours later at 7 p.m. Rent shapes nearly every aspect of life for many people in Guardado’s community. “We have to sacrifice our food intake. We cannot go to a restaurant for a meal,” she said. “We cannot spend more time with the family because we have to work more to pay for the rent.” In her neighborhood, Guardado and other renters have been fighting threats of eviction and inflated rent for years. Now rent bidding is exacerbating already difficult circumstances. “We are the targets of the landlords,” Guardado said. “They’re just waiting for the best bidder on the property.” In some cases, landlords will evict tenants to market apartments at a higher price, Guardado said, and other times, landlords try to start bidding wars while a tenant is still living in an apartment. Lucia Guardado joined a rally in front of the statehouse on Oct. 21, 2021, to urge the Joint Housing Committee to advance the COVID19 Housing Equity Bill immediately.Marilyn Humphries/City Life | Vida Urbana/© 2021 Marilyn Humphries Guardado said her landlord has shown her apartment multiple times, even though she is not leaving the unit. “If we pay, let’s say, $3,000, and the other people offer $3,300, they prefer to rent it to the other people,” she said. “Then we are part of a bidding war.” Some reports have indicated that the population of Black Bostonians has declined because of rising rental costs, but more recent research suggests that Black and Afro-Latino residents are actually increasing in number in Greater Boston. Even in the face of severe rent burden, Guardado said, she and others in her community don’t have better options. “We don’t qualify for those condominiums and those housing units that they bring to our communities,” Guardado said. “It’s not a matter of not wanting to leave; it’s that we don’t have anywhere to go. That’s the difference. We don’t have any choice.” The regulatory landscape Some brokerages have internal policies that prohibit bidding wars, but for such policies to work, landlords have to offer an “exclusive listing,” in which they choose to list with only one agency. But, it’s unknown how common such exclusive listings are. Under the current regulatory landscape, whether or not a bidding war happens is ultimately up to the landlord, according to Doucette, the real estate agent. “The rents are one price advertised, and that’s really what it should be,” Doucette said. “You know, you have somebody with a certain budget, and then you have to really go into it telling them it’s going to be $100 to $200 over.” Exactly what that regulation would look like for Boston is unclear, but laws in Australia offer some potential approaches. The Australian state of Queensland led the country in addressing rent bidding, passing legislation in 2008 that barred landlords and agents from soliciting bids from applicants. Other states have followed suit over the past few years, with Victoria, South Australia, and New South Wales all passing their own bans on the practice. The exact legislation differs from state to state, but most bans in the country prohibit only soliciting bids, not accepting them. In practice, that means rent bidding is still legal when applicants make unprompted offers above the asking price. Chris Martin , a senior research fellow at City Futures Research Centre in New South Wales, said regulating the solicitation of bids is “absolutely a good move,” but where governments go from there is still a topic of debate. Concerns about ‘secret’ rent bidding At the heart of that debate is the same tension that defines all prohibition arguments — outlaw a practice in its entirety and risk creating an illicit market or legalize and regulate the practice. In September, Victoria’s state government opted for the former approach, announcing its plan to ban fully the solicitation and acceptance of rental bids. Housing advocates welcomed the move, but experts like Martin have “real doubts about the practicality” of that approach. “I don’t think regulators have a lot of insight into what happens between the application process and the signing of a lease,” Martin said. “That sort of regulatory surveillance is something they don’t do, and it would be quite a task for them to do it, I think.” In neighboring New South Wales, Guardian Australia found that since the state passed its ban on the solicitation of rent bids last year, the government had not issued a single fine to agents or landlords, despite handing out hundreds of warnings. Whether Victoria can take on such a regulatory undertaking remains to be seen. New South Wales, Guardian Australia found that since the state passed its ban on the solicitation of rent bids last year, the government had not issued a single fine to agents or landlords, despite handing out hundreds of warnings. Whether Victoria can take on such a regulatory undertaking remains to be seen. Real estate groups have warned that a total ban also could lead to jacked-up list prices, where instead of receiving bids on a modest asking price, landlords could start the unit at a high price and slowly lower it until it is rented. But Victoria’s premier pushed back against such “ doomsday predictions. ” In May 2023, concerns about unsolicited or “secret” rent bidding in New South Wales motivated the government there to try to formalize the rent bidding process . Under the proposal, agents would have to keep a record of any bids made on a unit and report any bids to other applicants, allowing them time to make a counteroffer if they wish. The news was met with criticism from housing advocacy groups, who said the proposal would ultimately encourage rent bidding. Martin, who was in the minority of housing experts who supported the proposal, said the plan would — along with eliminating secret rent bidding — potentially discourage parties from participating in it in the first place. “If an applicant thought that the higher bid they were making wasn’t going to be secret and that it could initiate a rent bidding situation, they’d probably be less inclined to do it,” Martin said. “So, even as it formalizes rent bidding, it will probably be mildly discouraging.” At the risk of the government’s broader housing legislation not passing, the proposal was ultimately dropped from the bill. Despite his own support for the proposal, Martin said its loss is not particularly significant in the broader picture of addressing New South Wales’s rental market. Without more impactful reform alongside a rent bidding ban, such legislation is simply “Band-Aid law reform,” he said. SOURCE: Multiple Listing Service As Boston’s supply of housing trails demand, rent bidding will probably continue. Housing shortages turn the rental market into a game of musical chairs, bunten said. Historically, the people who were able to secure a seat, so to speak, were those who submitted their applications the quickest, assuming they met the landlord’s qualifications. Rent bidding is changing that. Now some renters are simply paying to get a seat — and taking on a higher rent burden in doing so. Others may not get a seat at all. “In any case, there’s a bunch of folks who are not gonna be able to sit down and who are not going to be able to find housing in Boston,” bunten said. Send comments to elijah.messmer@gmail.com . Subscribe to our free weekly real estate newsletter at Boston.com/address-newsletter , and follow Messmer on X @ElijahMessmer and Address @globehomes.

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