One Reason to Renew: Staying Put Can Save Renters Thousands of Dollars a Year, New Study Says
Your landlord just sent a lease renewal form, but you’re not sure you want to sign it again this year. The rent is going up, the parking situation sucks, and the upstairs neighbors always seem to drag furniture across the floor in those fleeting seconds between consciousness and sleep.
Still, you’re wary of breaking the cardinal rule of renting: Don’t give up a decent, affordable apartment if you don’t have to. A new study shows just how costly bucking that conventional wisdom can be.
The average rent nationwide has been rising, but market rate rents — those advertised to new renters — are climbing even faster, according to new research by Zillow. In 2015 (the latest data available), renters who moved into a new apartment ended up paying way more than those who had renewed their lease and lived in the same apartment for the previous five years — an average of $329 a month more, or an additional $3,946 a year.
“In some of the hottest rental markets, where rents are still rising aggressively, continually renewing a lease can mean saving thousands of dollars,” said Svenja Gudell, chief economist at Zillow. In the New York area, for instance, renters who stayed put saved an average of $7,376 a year. The savings in San Jose, Boston, and San Francisco were even more dramatic — upwards of $8,000 to $9,000. The discrepancy was lowest in Las Vegas, where renewing an old lease only saved $842 the next year.
Of course, the data don’t tell the whole story. For one thing, high-rent luxury apartments have dominated new development in some cities. And the people renting new apartments might have been moving because their landlords were jacking up the rent anyway, while the ones who stayed may have done so specifically because their landlords were more lax about rent hikes.
Regardless, there’s something to be said for appreciating the imperfect apartment you have instead of longing for more — especially once you factor in the cost and hassle of moving. Those thousands of dollars in higher rents are just the beginning. In competitive markets like New York, broker’s fees can add a full month’s rent or more to the pricey process of changing apartments, to say nothing of renting a U-Haul van or hiring movers.
Gratefully, there’s some new help on that end, at least in New York: A website called Joinery now allows renters to find available apartments through departing tenants instead of brokers — a fortune once reserved for the lucky few bequeathed a favorable lease from a friend or coworker. The outgoing tenants, who need their landlord’s permission, can charge a fee (capped at 5%) to make it worth their while — but Joinery says that’s only about a third of a traditional broker’s fee.
Still, adding it all up, you’ll probably save money staying put — if you can just resolve to look past the lousy parking and noisy neighbors for one more year.