Rent or Buy? 2017 Begins with Spike in Number of Renters Shopping for Homes
New TransUnion analysis finds multifamily property managers may need to consider new amenities and services such as rental payment reporting to keep renters in units
In a sign that consumers may be shifting preferences from renting to homeownership, a new TransUnion (NYSE: TRU) analysis found that 55% of those who shopped for a mortgage in Q1 2017 were non-homeowners – most of whom are renters. This is a significant rise from Q1 2016 (50%) and Q1 2015 (45%). The results of the study were featured at the National Apartment Association Education Conference & Exposition.
The rental market has seen sustained growth for the last several years, but occupancy rates have flattened from their peak in the second quarter of 2016. This new uptick in mortgage shopping could be a precursor to further declines in occupancy, which would impact rent growth – and ultimately, revenue – for multifamily property owners. In anticipation of this potential shift, owners and property managers should be offering the right amenities and programs designed to attract renters.
TransUnion’s report found that millennials’ interest in homeownership is growing steadily over time. In 2017, three in 10 (29%) non-homeowners who shopped for mortgages were millennials, up slightly from 28% in 2016 and 27% in 2015.
In addition, 34 million renters between ages 25 and 44 – typically a prime age range for homeownership – were credit eligible for a mortgage. Just 36% of renters under 44 years old had a VantageScore® 3.0 credit score below 580, a common benchmark used by some institutions to determine whether a borrower qualifies for a low down payment loan.
Percent of Non-Homeowners
25-34 years old
35-44 years old
45-54 years old
55-64 years old
65+ years old
“Property management companies should consider new services such as rental payment reporting to credit bureaus to entice renters into their multifamily properties.” added Doherty. “In many cases, renters are more likely to choose a unit if their property manager reports their rental payments. Our survey data show that most renters prioritize their rental payments and want their payment reported.”
A prior TransUnion survey of renters found that more than half (51%) would be more likely to choose a property if they knew their landlord would report their rental payments to credit bureaus. Nearly eight in ten (79 percent) survey respondents said they prioritize rental payments above all other monthly bills.
Property managers use TransUnion’s ResidentCredit to report the amount and timeliness of a monthly rental payment, or any balanced owed for a payment. Renters’ payments appear on their credit report along with other financial obligations. Some consumers, especially subprime consumers, may experience an increase in their credit score as a result of on-time payments being reported.
To learn more about TransUnion’s multifamily housing solutions and ResidentCredit, please stop by booth #1120 at the National Apartment Association Education Conference & Expo or visit http://rentalscreening.transunion.com/solutions/residentcredit.
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