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Winter 2012 Issue
Rental Application Trends: 3 Things to Watch for in 2012
While winter is finally arriving in many parts of the United States, the apartment market continues to heat up! For many, 2011 was a year of recovery and prosperity, and 2012 is projecting to be even better. With national vacancy rates at their lowest levels since 2001(WSJ) and an estimated 1.8 million jobs to be created in the US in 2012(WSJ), apartment operators are well positioned to see continued growth in demand and rents. While the economy still shows plenty of room for improvement across much of the US, there are several interesting trends developing in the multifamily applicant pool and how landlords are screening their prospects. For 2012, RentGrow anticipates three key trends:
- National applicant traffic will increase 5-10%
- The recent credit history of applicants will show improvement
- Income evaluation will play a greater role in the screening process
Applicant Traffic Expected to Increase
While applicant traffic may slow during winter months, as it typically does, RentGrow expects applicant traffic to increase by 5-10% over the course of the year compared to 2011. While 2011 started off sluggish in terms of application volumes, year-over-year applications were up over 6% in Q4. With 1.6 million jobs created in 2011(US BLS) and an additional 1.8 million expected in 2012(WSJ), more and more Americans should be seeking out new housing.
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“Recent” Credit Histories Will Show Improvement
In addition to increased applicant traffic, the recent credit history of those applying for apartments will also improve, generating more qualified prospects. While millions of Americans will continue to have serious blemishes appearing on their credit reports from difficult times in 2008 and 2009, an increasing number of applicants with strong credit histories over the last 24 months are emerging. As an example, in Q4 2010, 3.06% of applicants had a recent bankruptcy and 1.34% had a recent foreclosure on their credit report, while in Q4 2011, those percentages dropped to 2.93% and 1.12%, respectively.
Income Evaluation Will Play a Larger Role in the
Screening Process
As rents continue to soar in many markets, finding and retaining residents who can keep up with the increases may become a considerable challenge. According to Axiometrics and MPF Research, rents rose slightly more than 4% nationally in 2011, with 4-5% growth anticipated for 2012. Income, on the other hand, continues to lag well behind, with real median household incomes down over 1% in 2011 and over 4% since January of 2010(Sentier Research).
Conclusion
As market conditions continue to rebound, it will be as important as ever for management companies to closely monitor their applicant pools to ensure that they are attracting and leasing to the right applicants. Understanding the economic and social trends affecting your current and prospective residents will allow you to better adjust your marketing and screening practices to best select residents from the available applicants. In 2012, it will be crucial to work closely with your screening provider to get the most out of this growing applicant pool. |
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