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Renters getting burned in 'red hot' St. Louis real estate market

"There are people out there taking advantage of people right now because the need is there."

ST. LOUIS COUNTY, Mo. — “It was perfect,” recalls Dee Dixon, thinking of the rental home she knew would be just the right fit for her, her teenage son and their small dog. It would be the perfect place not just to call home, but for a fresh start. Dixon works hard in her administrative job at a local university; she’s proud her two grown children are out on their own. She’s rebuilding her credit, but her score is already decent. She makes a comfortable salary.

So when she found a house in one of her desired locations in St. Louis County, she thought it could be the end of her search. Instead, she sighs...

“It was too good to be true.”

The house listing wasn’t real — or at least the rental listing wasn’t. It was a scam.

“Not everyone is out there to scam people, but there are people out there taking advantage of people right now because the need is there,” she said.

She’s referencing the shortage of rental homes available right now throughout the St. Louis region. Put simply, people choosing not to sell their homes right now means people looking to buy homes have fewer options. That means many of them are choosing to rent instead. Not only are there more renters, though, because of a shortage of available homes, renters are choosing to stay in their properties over moving into new ones or even buying homes — thus the cycle continues.

“In addition to that, we think there's fewer people leaving St. Louis for relocation purposes,” said Mark Duve, a property manager and leasing agent with West End Management Company. He said they often worked with people who left town for a year or two at a time for a work assignment, renting their home out in the meantime. “But now with COVID, both companies and the employees have learned to work from home successfully.”

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Duve said renters can be more competitive by offering to move in sooner and lease for longer — and pay higher monthly rates.

“It's also like the buyer's market where you may want to choose to bid a little bit more than the asking price for the home,” said Duve.

This market is another reason why renters, new and established, could be paying higher monthly rates.

“It's like anything, supply and demand,” said Duve. “And with the short supply, the rental rates are creeping up.”

Housing advocates like broker Gail Brown worry how this impacts everyone in the Bi-state.

“One of the great things about St. Louis and about the region that people always spoke to is our affordable housing market,” she said. “Well, if we continue to push the market and push market values, then that's not going to be a distinction that we're going to be known for.”

Even finding a place to rent is expensive. It’s not uncommon for landlords to ask tenants to pay application fees to cover the cost of paperwork and background checks. However, when landlords accept multiple applications for a property only one applicant can eventually rent that’s money down the drain for the others.

“I’m wasting money on application fees: it used to be $35, $50, as high as $70 now,” said Dixon. “And you're paying $70 only to be told after you pay the $70 there's three or four other applicants on this house.”

And to top it off, some are taking advantage of the frustration — and desperation — people have in finding their new homes.

“There are scammers out there, you need to be aware of that,” said Duve.

One common scam is people pretending to rent out a property online often advertise a low rate, then ask for application fees, even security deposits or the first month's rent with no claim to the property.

Dixon said when she did a quick Google search of the “perfect home” she’d found online for rent, she saw it pop up as “for sale” by another agent. She said she contacted the leasing agent to let them know that someone was using the photos and details of that property online to market it as a rental.

“It’s pretty disheartening,” said Dixon, who says she sees it quite frequently with rentals listed on Facebook.

“So somebody on a fixed budget is like, ‘That's great, I’m going to take advantage of this,'” said Dixon.

Duve said it’s important to trust your skeptical instincts, especially if something seems too good to be true.

“If you're looking in a neighborhood where, you know, the home is listed for $1,000, but everything else in the neighborhood is going for $1,500 or higher, then you need to ask yourself, why is it?”

It’s also important to look up the property address, either with city/county records or even a quick Google search, to make sure the owner really has the right to rent the place out.

It's easy, it's free. Anyone can do it,” said Duve. “And then, of course, my last advice would be get inside the home, get in front of the landlord, get in front of the agent, see who they are, know who they are. You can check up on people pretty easily these days.”

Dixon hopes her persistence pays off, and that the right home is still out there for her and her son.

“I am a good tenant, it's just, I’ve got to find a great landlord,” she said. “That's hard to do.”