It’s no secret that rents are rising more rapidly than household incomes, and developers are struggling to keep up with the increased demand for housing.
This trend is especially pronounced in more populous cities and states like California, which has been dubbed the second most expensive state to live in 2018. With a housing affordability crisis on its hands, California needs a solution that provides some relief to both renters and landlords.
That’s why TheGuarantors are thrilled to announce their expansion into California!
Given its population size and economic output, California comes with its fair share of challenges for renters. San Francisco is the most expensive city in the state with an average one-bedroom apartment costing ~$3,500 per month, compared to the $78,000 average household income in the city. Los Angeles, California’s largest city( 3.9 million residents), may seem more affordable with the average one-bedroom costing ~$2,500. However, considering LA’s average household income is $54,000, it has roughly the same affordability problem.
Due to high rent costs relative to income and strict landlord guidelines, qualifying for an apartment in California can be challenging. In San Francisco, the vacancy rate is only 2.66% allowing landlords to be very particular about who they accept. The struggle is even more difficult for expats and international students, because a credit score is one of the many things that landlords check when reviewing an application. Lack of US credit history can disqualify a renter almost immediately.
So, does a renter who is struggling to get approved in an already saturated market settle for unsafe or inadequate living conditions? Not necessarily — they’ve found other ways around this issue:
- They Find Roommates: There is strength in numbers, which is especially true when it comes to living situations. The average two-bedroom in San Francisco costs ~$4,600 so by buddying up, a renter could save ~$1,200 per month. Many renters take advantage of roommate finding apps and websites. These vary from city to city, and essentially act like virtual dating apps for renters to find the best living partner possible.
- They Seek Brokers & Agents: International and young renters who are new to big city living and overwhelmed by a competitive rental market seek the assistance of expert brokers and agents. If they meet the specific landlord requirements, they get a leg up when it comes to securing the apartment they want.
- They Make Themselves Approvable: Due to credit score and income history requirements, many people — especially young and international renters — still have difficulties getting approved for an apartment. To remedy this, utilize services like a Lease Guarantee, which mitigates landlord risk by guaranteeing rent payments to the landlord. With backing from top insurance carriers, landlords are comfortable accepting tenants with Lease Guarantee that otherwise would not have been approved.
Although landlords may have the upper hand in the current saturated California rental market, they will need to continue to adapt to meet the shifting demands and expectations of renters.
TheGuarantors, the leading risk-management platform for landlords, has recently acquired a license to offer their Lease Guarantee product in the state of California. By joining their additional product offerings, Security Deposit Replacement and Renters Insurance Compliance (licenses previously acquired), the company can now offer their full suite of risk-management products for landlords in the state. Landlords can choose to offer any combination of TheGuarantors product offerings within their portfolios, at no additional cost.
This milestone puts TheGuarantors at the forefront of the Lease Guarantee offering in the state and significantly furthers their growth nationally.