We all require shelter.
Some people purchase property and some people rent.
Renting gives you more flexibility and comes with additional attractive qualities for many people.
When you start looking for apartments, you may find yourself disheartened at the price of rent these days.
What exactly are you paying for, and why are prices so high?
Here are the top 10 reasons one-bedroom apartments are so expensive.
Why Are One-Bedroom Apartments So Expensive? (Top 10 Reasons)
As any realtor will tell you, the price of real estate (and rent) is all about location, location, location!
You pay more for rent when you live in a highly desirable location.
Places can be highly desirable due to their proximity to downtown or major landmarks.
As you get further and further away from the hot spots, the prices tend to go down (but commute time goes up significantly).
Some places are more desirable thanks to nice weather and pro-business and pro-retirement laws, such as Austin or Palm Beach.
Other places, such as Boulder, CO, get high scores when it comes to resident happiness and also benefit from good publicity about those findings.
A wide range of factors work together to determine the desirability of a particular location, but ultimately, it comes down to supply and demand.
If a location has more people looking at apartments than available apartments, the rent increases.
The cities with the highest average rent for a one-bedroom apartment are:
- New York City: $3,260
- San Fransisco: $2,850
- Boston: $2,720
- San Jose: $2,390
- Miami: $2,340
It’s good to prepare yourself for the high rent prices up front if you plan to live in one of these areas so that you don’t end up making plans that your bank account can’t support.
Living expenses in large cities tend to be significantly higher since they offer so much in the terms of business opportunities, culture, and nightlife.
Plus, most major cities have efficient public transportation that can help you get anywhere you need to go.
Also, the large number of people increases the amount of demand but not the amount of supply, allowing people to raise prices.
When looking for apartments, don’t forget to research the different neighborhoods and suburbs in the area.
Ideally, you want to find a location that offers a reasonable commute in a reasonably safe location, but you also want to find a place that suits your lifestyle.
When looking at neighborhoods in the city, be mindful that some neighborhoods have lower rent for a reason, such as high crime rates and poverty levels.
It’s not worth it to save a couple of dollars if you won’t feel comfortable.
Suburbs also offer popular rental areas for families thanks to the family-friendly environment and slower pace.
They can also provide the perfect environment for some single people who prefer a comfortable distance from the hustle and bustle of the city.
When looking at two one-bedroom apartments in the same location with drastically different prices, it usually comes down to the different amenities offered at both buildings.
Some of the possible amenities you may find at your building that may increase the value include:
- High-end building materials – Beautiful marble countertops and real hardwood floors will cost significantly more than laminate counters and laminate floors since these materials are so much more expensive.
- Parking spot – Especially important in cities with a high population density, a parking spot can be extremely valuable. Some apartments even offer guest passes or a designated guest parking spot.
- Laundry machines – Whether you have a laundry room or a washer and dryer in your unit, laundry facilities on-site make it much more convenient to do laundry compared to lugging your laundry to the laundromat.
- Fitness room – Some high-end buildings include a small gym in the building with exercise machines and weights for residents to use. You won’t have to pay for a gym membership, but the facilities may not be quite the same.
- Pool – A lot of apartment complexes come with a community pool for residents to enjoy in the summer. As pools can be a big liability, there will likely be strict rules on when you can enjoy the pool and what you can do.
- Air Conditioner – Air conditioning doesn’t always come standard. Some units provide a window unit while others provide central air conditioning. Air conditioning costs significantly more in Southern states that get extremely hot in the summer.
- Dishwasher – If your unit doesn’t come with a dishwasher, you’ll be stuck washing dishes by hand.
- Balcony – A balcony can be a great place in your apartment for reading, quiet introspection, or if you want to smoke outside without leaving the privacy of your home.
- Walk-in closet – Fashionistas with a lot of clothes need a large closet. Many apartments charge more for a walk-in closet that gives residents plenty of space for proper storage of their styles.
- Security doors/cameras – If you are concerned about security, you should look for apartments that come with security doors at the main entrance and security cameras to monitor the people who come in and out of the building. Some buildings even have a doorman on-site to keep watch over things.
If you must stick to a budget, you may be forced to limit some of the amenities you get.
Prioritize which ones mean the most to you and analyze the best options to help you make your decision.
Utilities are resources and services provided to you by an outside service, such as electricity, gas, water, internet, and cable.
Some apartments come with free utilities, which can add a lot of value for the tenant.
For example, free electricity can come in very handy if you work from home and also must keep heat lamps on constantly for your pet lizard.
However, someone who spends a lot of time at the office with no advanced electrical needs won’t get as much out of the free electricity.
While we explained some of the variables that can go into your utility bills, the national average cost of utilities in a one-bedroom apartment is $125.86 a month.
Desirable areas may charge more for utilities.
Always clarify who assumes the responsibility for all utilities in advance so that you don’t end up with your gas or electricity cut off since you never paid the bill.
Don’t forget to ask about water and trash.
Be sure to call your utility company in advance to schedule the service activation.
Don’t expect that the company will have availability the next day. Scheduling in advance ensures that you don’t end up stuck without essential utilities when you first move in.
4. Property Maintenance
When you own your home, you have to pay for all maintenance and repairs on your property.
One of the great things about living in an apartment is that you won’t have to pay when something breaks down (assuming you didn’t cause the damage).
If the hot water goes out, you won’t have to buy a new water heater.
You call the landlord or the leasing office and put in a service request.
The property handles it from there.
They also have a responsibility to fix the problem promptly.
You also don’t need to maintain the property.
The property manager will have someone mow the lawn and clean the common areas.
On average, apartment owners pay anywhere from $500 to $1,000 a year in maintenance costs per unit.
Landlords have a responsibility to maintain the property up to residential building codes.
If you do notice something wrong with the property that doesn’t seem to be getting proper attention, be sure to write a formal complaint to leave a paper trail.
5. Additional Fees
Every apartment complex has rules and regulations.
In some cases, the fine print may mean that you find an additional fee on your bill from time to time.
While frustrating, you signed the agreement, and the fees were probably clearly stated on the document.
Some of the most common fees you’ll run across are late fees for late rent payments, pet fees, smoking fees, and administrative fees.
Always ask about fees in advance so that you know what to expect.
Neighbors can also give you a sense of what to expect.
Some apartments also require residents to get renter’s insurance that covers their personal property in the case of a problem.
The landlord has insurance on the building, but their insurance may not cover your property, such as your television or laptop.
You are responsible for covering these items.
To save money on your renter’s insurance, bundle your car insurance and renter’s insurance and shop around before selecting your insurance provider.
6. Rising Rent Prices
If you’ve ever gotten that certified letter from your landlord to you and everyone else in the building, you are probably familiar with rising rent prices.
In most situations, after your lease expires, you and your landlord will agree on whether you prefer to renew the lease or whether you want to go to a month-to-month agreement.
When under the lease, the landlord and you must both adhere to the payment agreed upon in the lease.
After the lease is up, the landlord can raise the rent at their discretion unless you sign another lease.
They can always raise the rent each time they renew the lease (if they choose).
They will formally inform you of the rent increase.
In most cases, they are only obligated to give you 30 days’ notice.
You will then respond.
Your choices are to agree to the new rent or move out.
If you agree to the new rent, you will sign a new lease with the updated terms.
Some people get lucky enough to find something known as a “rent-controlled” apartment.
As the name suggests, rent-controlled apartments have a controlled rent price that won’t go up during your stay, no matter how long that may be.
Unfortunately, with property tax prices on the rise, landlords feel financial pressure from the government for their assets, so they sometimes have no other choice than to increase the rent a little bit.
Progressive residential code upgrades can also end up costing landlords.
Old appliances or building materials may no longer be up to code.
Instead of saving the landlord money, they will end up paying more money for upgrades in order to stay up to code.
If landlords fail to upgrade out-of-code items in a timely manner, they can be fined.
7. Property Management Operations
For larger leasing companies with multiple buildings, the management company must hire people to help them with the day-to-day operations, such as managing legal documents and answering phone calls.
Some property management teams also have landscaping, maintenance, or handyman employees.
Alternatively, they need to hire a third party to perform the tasks for them.
The property manager must also have a location to perform these tasks, meaning they have to pay for office rent or utilize one of their own buildings instead of renting it out.
They’ll also need to pay for office equipment and office supplies along with paying for utilities and any landscaping equipment and tools that they own.
Neighbors can admittedly be a pain sometimes.
However, they can also be a source of friendship and support, especially if you don’t know many other people in the area.
Some apartments support social situations by providing communal courtyards and entertainment areas.
People in the building will meet each other in these areas.
Some residents may even host regular events, such as building potlucks.
Your neighbors can also help you in case you get locked out of the main door or need a cup of sugar.
In order to ensure a neighborly environment, landlords must take special precautions to ensure privacy, such as thoughtful window placement and thick walls with sound-proofing capabilities.
There will also be rules, such as no loud music after 10:00 p.m.
Things happen, and sometimes we need to take responsibility for those things.
When you live in an apartment, you are using someone else’s property.
If you damage the property, the owner will expect compensation.
If you break a window, you will be expected to pay for the repairs.
You and your landlord will agree on how to handle payment based on the situation.
Most of the expenses related to damage will be calculated when you leave.
You and your landlord will perform a final walkthrough together.
When the walkthrough happens, the landlord will inspect the place for the cost of damage done to the apartment.
Damage can take the form of broken items and holes in walls or chipped paint.
The landlord will take the expenses associated with the damage out of your security deposit.
Most apartments require a security deposit at the time of signing the lease (usually one or two months’ rent).
If you leave the apartment in pristine condition, you may get the security deposit back.
If you leave the place a mess, you will end up paying for it.
Your landlord is required to submit an itemized explanation of any money they take from your deposit.
To reduce surprises at the end of your lease, make your landlord aware of any damage that does occur to handle it right away.
In order to get the deposit back, clean the apartment regularly and clean it thoroughly before you leave.
Don’t abandon items, or you may be charged for removal.
If your landlord refuses to give you your security deposit back without proper reasoning, you will need to take them to civil court to resolve the issue.
Be sure to have evidence to support your case, such as pictures of the apartment’s condition when you left.
10. No Ownership
Many people worry about the cost of the apartment rent, but what they should really be worried about is that rent doesn’t lead to an investment of any kind.
Compared to a mortgage, which goes toward the cost of a house that you get to keep, your rent doesn’t contribute to your assets.
Unfortunately, many people don’t have the financial security or the credit to get approved for a mortgage.
In fact, homeownership has gone down significantly compared to 50 years ago.
Unfortunately, high rent prices can prevent homeownership in the future as well.
You need to work to set yourself up well financially so that you can eventually own instead of rent one day.
Some financial tips for people planning for homeownership include:
- Monitor your credit score
- Consolidate your debt
- Save for a large down payment on your future house
- Create emergency savings
- Live within your means
- Work extra hours or pick up a side gig
Give yourself a couple of years to set up the finances for such a large purchase.
For the majority of renters, renting is a temporary solution until they reach a point in life when they can buy their own house or condo.
Unfortunately, high rent prices don’t always support the quick accomplishment of that goal.
Minimize housing expenses by picking a housing option in your price range and treating it properly.
Of course, if you don’t like the feeling of being tied down by a house and a 30-year mortgage, the rent is a small price to pay for freedom and unique experiences.