Why Is It So Hard to Find a Place to Rent?

Finding a suitable place to rent has become challenging for many. The search often involves limited options, stiff competition, and rising costs, leading to widespread frustration. This situation reflects a complex interplay of factors within the housing market. Understanding these dynamics helps clarify why securing rental housing is difficult.

Supply Constraints in the Rental Market

The availability of rental units is hampered by a slow rate of new residential construction. New home construction, including multi-family units, has struggled to keep pace with demand, partly due to labor shortages in the construction industry. A recent study estimated that the skilled labor shortage leads to an annual economic impact of over $10.8 billion due to longer construction times and lost production, resulting in approximately 19,000 single-family homes not being built in 2024. Material costs also present a significant hurdle, with prices for key construction materials like concrete, lumber, and steel increasing since 2020, adding to the overall expense of building new properties. These rising input costs and labor issues make it challenging for developers to initiate and complete projects, limiting the expansion of rental housing stock.

Regulatory hurdles restrict the creation of new rental housing. Restrictive zoning laws, which often designate large areas exclusively for single-family homes, limit the development of higher-density multi-family rental properties. These regulations can prevent the construction of duplexes, townhomes, or apartment buildings, even in areas where demand for rental units is high. Lengthy and complex permitting processes can significantly delay construction projects, tying up developers’ capital and increasing administrative costs. In some major cities, the median time for multi-family housing projects to navigate the permitting process can range from several months to over two years. Building codes, while ensuring safety and quality, also contribute to higher construction expenses; changes in codes have added an average of 6.1% to the cost of constructing a new home.

Existing housing stock also sees conversions that reduce the pool of long-term rental units. Some properties are transitioned into short-term vacation rentals, especially in popular tourist destinations, removing them from the residential rental market. Individual homes previously used as long-term rentals may be sold to owner-occupiers, shrinking the available inventory for renters. This shift directly impacts the number of properties accessible for traditional leasing.

Aging housing stock presents another supply challenge. Older properties often require extensive and costly renovations to remain habitable or meet modern living standards, which can deter landlords from maintaining them as rental units or lead to units being removed from the market. This deferred maintenance can reduce the overall quality and quantity of available rentals, as not all aging units are economically viable to upgrade for continued rental use.

Demand Pressures on Rental Housing

Demand for rental housing stems from demographic and economic shifts. Population growth naturally increases the number of households seeking housing, and with a growing population, the need for both owned and rented units expands. This continuous increase in the number of people requiring housing contributes to the persistent demand across the rental market.

Changing household demographics also fuel rental demand. There is a discernible trend towards smaller household sizes, meaning more individual households require living spaces, even if the total population growth is modest. Younger generations are delaying homeownership due to economic factors, opting for rental accommodations for longer periods. This includes individuals living independently earlier or remaining in rental situations as they progress through their careers.

High home purchase prices and rising mortgage interest rates have made homeownership less accessible. When the cost of purchasing a home becomes prohibitive, more individuals and families are compelled to remain in or enter the rental market. This directly translates into heightened competition for available rental units, as a larger segment of the population seeks rental solutions. For instance, less than one-third of home listings were affordable for the typical U.S. household in early 2025, compared to over half before the pandemic.

Internal migration patterns further intensify demand in specific regions. People are moving to desirable urban centers or suburban areas that already face existing housing supply limitations. This influx of new residents into areas with constrained housing stock places additional pressure on the rental market in those locations. The concentration of population movement into these popular areas exacerbates the imbalance between available rental properties and people seeking them.

Financial Realities for Renters and Developers

Rising costs associated with construction present a substantial hurdle for developers. Land acquisition costs have been a significant component of development expenses, sometimes accounting for over 70% of the cost of building a home in certain markets. Raw material costs for materials like concrete, lumber, and steel have seen substantial increases, while labor costs for builders have also risen. These escalating expenses directly impact the financial feasibility and profitability of constructing new rental properties.

Economic factors, such as inflation and interest rates, significantly affect developers’ borrowing costs and potential investment returns. When interest rates are high, the cost of financing construction loans increases, making new projects less attractive or even untenable. This economic environment can discourage developers from embarking on new rental housing projects, limiting future supply.

Rent affordability has deteriorated as average wages have not kept pace with escalating rental prices. In 2022, the number of cost-burdened renter households, defined as those spending over 30% of their income on housing, reached a new high of 22.4 million, representing 50% of all renter households. This means a significant portion of a renter’s income is allocated to housing, leaving less for other essential expenses and savings. The median amount of money remaining for low-income renters after paying for rent and utilities was only $310 per month in 2022, a substantial decrease since 2001 when adjusted for inflation.

Landlords and property owners also face complex financial calculations. They must balance their operational costs, including property taxes, insurance premiums, and maintenance expenses, against the potential rental income. Property taxes vary widely but represent a continuous expense, and insurance costs have also been rising, particularly in areas prone to natural disasters. Decisions regarding unit availability and pricing are influenced by these operational costs, as property owners seek to cover their expenses and achieve a reasonable return on investment, which can lead to higher rental rates.

Intense Competition and Application Obstacles

The current rental market is characterized by a high volume of applicants for each available unit. This intense competition means that desirable properties often receive numerous applications shortly after being listed, leading to rapid turnover and limited time for prospective tenants to make decisions. Individuals often feel pressured to act quickly, sometimes foregoing thorough consideration, to secure a unit before it is taken by another applicant.

Landlords frequently impose stringent requirements on prospective tenants to mitigate risk. These often include high credit score thresholds, with scores typically needing to be in the good to excellent range (e.g., 670 or higher) to be considered competitive. Specific income-to-rent ratios, such as requiring an applicant’s gross monthly income to be at least two or three times the monthly rent, are also common. Extensive background and reference checks, covering employment history, previous landlord references, and criminal records, can disqualify many potential renters who may not meet every strict criterion.

The prevalence of application fees adds another financial burden for individuals actively searching for rentals. These non-refundable fees, which can range from $30 to $100 per applicant, can accumulate quickly when a person applies to multiple properties in a competitive market. Furthermore, the application processes can be opaque or lengthy, involving multiple steps, document submissions, and waiting periods, which can be frustrating and disadvantage those needing to secure housing quickly.

This competitive environment can lead to situations where renters feel compelled to accept less desirable conditions. This might include agreeing to a higher rent than initially preferred, accepting a unit with fewer amenities, or committing to longer lease terms. The pressure to secure housing quickly in a tight market can reduce a renter’s bargaining power and influence their decision-making, sometimes resulting in compromises on their housing preferences or financial capabilities.