Quality of renter applicants increasing
According to today’s CoreLogic Renter Applicant Risk (RAR) Index Report for the first quarter of 2013, the value of renter applicants’s credit quality and risk of default has improved by two points compared to the first quarter of 2012, representing an improved ability for applicants to meet lease obligations.
“It’s encouraging to see better qualified applicants who are more likely to meet their lease obligations,” said Jay Harris, senior director, CoreLogic SafeRent. “As the economy continues to grow slowly, conditions appear cautiously optimistic for continued improvement in renter applicant qualifications in the year ahead. During this relatively upbeat period, renter trends are pointing toward increased confidence among property owners and applicants.”
More renter trends in the first quarter
CoreLogic reports four key trends in the first quarter: fewer prospective residents applied, yet applicant incomes and rent-to-income ratios rose, meanwhile lower-priced rentals saw reduced prices.
Renter applicant traffic nationally was down slightly and year over year, the CoreLogic index measuring applicant traffic for the same properties decreased by 5.4 percent for Class A properties, 3.7 percent for Class B properties and 4.4 percent for Class C properties.
In the first quarter of 2013, applicants’ incomes inched up slightly across all property classes, along with rent-to-income ratios. On a year-over-year basis, the average monthly applicant income for Class A properties was $4,528, an increase of 1.4 percent. For Class B properties, it was $2,895, an increase of 0.2 percent, and for Class C properties, it was $2,047, an increase of 0.4 percent.
The average rent-to-income ratio for Class A properties was 22.9 percent per lease, a year-over-year increase of 7.0 percent. For Class B properties, the average rent-to-income ratio was 21.7 percent per lease, a year-over-year increase of 11.2 percent. For Class C properties, the average rent-to-income ratio was 21.9 percent per lease, a year-over-year increase of 10.1 percent.
CoreLogic reports that rising rent-to-income ratios could indicate that individuals are stretching their budgets to afford higher quality properties.
Meanwhile, prices on lower-priced rentals fell in the first quarter, as average rent amounts for Class C properties decreased by 1.3 percent year over year to $554. The average rent amount for Class A properties in the first quarter of 2013 was $1,571, a year-over-year decrease of 0.8 percent while the average rent amount for Class B properties increased by 0.1 percent to $874.