Temporary living can be a doozy of a line item in a relocation budget. Employers, capped-budget transferees, and even those who really do care how much their move costs their company (yes, some really do!) can find themselves sticker shocked from temporary living totals. As such, we are often questioned about the cost drivers for temporary living and if they are legitimate.
Raise your hand if you’ve ever gotten this question:
“I just found an apartment in the same building for $1,500. Why are we being charged $4,500 a month?”
This question gets right at the heart of the confusion. But, in this case, the transferee is comparing apples to oranges. There are many factors that go into one month of temporary living versus an apartment for rent:
Terms: Temporary living often comes in increments of 30 days, whereas a regular apartment lease usually has a minimum period of one year. The longer lease terms help ensure that landlords will receive continual income throughout the year as well as less wear and tear from revolving tenants. The apartment complex is not willing to rent out month to month, therefore, a temporary living company must sign a year lease and hope they can recoup that cost with enough tenants throughout the course of the year.
Furnishings: Regular apartments are bare shells that a tenant must furnish with furniture, linens, window treatments, appliances, pots and pans, and every other creature comfort. In a temporary living situation, the provider must furnish all these things and keep them in new, or like new, condition for each monthly tenant.
Utilities: Think of all the arrangements and expenses associated with getting power, cable, and internet set up in an apartment. With temporary housing, the setup and, in many cases, all or part of the charges are included in the cost. Additionally, if you are only staying for a month or two, setting up these services as a traditional renter would be even more costly.
Service: What happens if something goes wrong with your refrigerator or other appliance in the night or weekend? In a traditional apartment lease, if these are your items you are on your own. For most cases in temporary living, a reputable agency will provide 24/7 assistance and, if the fix is possible and economically feasible, they will move forward with the solution.
Off the beaten path: Temporary living companies want to increase the probability of full occupancy. Therefore, if you are looking for short-term housing in a remote area, they are less likely to be helpful. Although, if you do anticipate regular needs in certain areas, providers may secure options if they assess it will be worth their while.
Large families: Most employers encourage employees to use temporary quarters suitable for one or two people until their family can reunite in their future permanent residence. Accommodating a family of four or more is very difficult without using additional resources, such as property management or real estate agencies.
Pets: While many temporary living locations will not allow pets, those that do will often place size, breed, and a number of restrictions on the property. There may also be fees associated with having pets in the unit.
It’s important to remember that the cost to rent any property, annually or on a temporary basis, is a function of both macro and microeconomic market forces, as well as supply and demand. There are some broader trends that companies should consider when reviewing temporary living costs. Inflation, for example, has led to higher rent costs across the board as landlords also face increasing costs of ownership and maintenance, including labor and repairs. Further, there is a shortage of rental properties in general and affordable ones in particular. In many cases the supply cannot meet the demand and units are offered at a premium.
All this being said, Rent.com reports that good news may be on the horizon in certain markets. After nearly a year of double-digit increases from October 2021 through August 2022, national rental rates began decelerating in September 2022. A June 2023 report shows that the national median rent price was less in May than the year prior. Still, to manage expectations, please note that while some states are showing flat and/or decreasing rates, other states, such as New York, are still seeing rent increases.