TransUnion: Rental Markets May Be Seeing Signs of Improvement
CHICAGO, IL--(Marketwire - November 18, 2010) - Property managers appear to be weathering the economic storm brought on by the Great Recession better than they did in 2009, according to a new TransUnion survey. Seven out of 10 property managers said their rental properties have no vacancies and only 39 percent of respondents said they're having difficulty finding residents in today's economic climate. Additionally, more than 3 out of 4 respondents (76 percent) said rental prices have either remained the same or increased since last year.
The nationwide survey was administered in October and included 476 responses from property managers, with nearly 95 percent of respondents managing 50 or fewer rental units. In the summer of 2009, a similar TransUnion survey found that approximately 6 in 10 property managers with fewer than 50 rental units had no vacancies.
"There has been a positive change in the rental market in the last year as rental prices appear to have stabilized and property managers are locating more reliable tenants," said Mike Mauseth, vice president of TransUnion's rental screening business unit. "Despite the positive signs we observed in the survey, unemployment rates remain high and many prospective tenants continue to struggle in this difficult economy."
TransUnion's Credit Risk Index, which measures the changes in average consumer credit risk, remains 7.1 percent higher (126.79 in Q3 2010) than at the start of the recession (118.38 in Q4 2007). However, the Credit Risk Index has now declined for 3 straight quarters and has dropped more than 2 percent from its peak of 129.67 in Q4 2009.
With the continued elevated credit risk for American consumers, it's not surprising that two-thirds of survey respondents (67 percent) said they were concerned about attracting profitable and reliable tenants for the remainder of the calendar year. However, it should be noted that in the 2009 survey, 76 percent of respondents with fewer than 50 rental units were concerned about the same issue.
Another interesting finding from the survey was that 86 percent of respondents said they conduct credit checks on all of their residents, but only 72 percent conduct criminal background checks. Criminal background checks may benefit property managers in protecting the safety and security of their properties as well as potentially avoiding renters who "skip out" of their apartments -- leaving their units with unpaid rent or damages. Approximately half of property managers (46 percent) have had renters skip out of their lease, with 19 percent having this occur in the last year alone. Interestingly, only 46 percent of property managers attempted to pursue the skipped tenants.
"These statistics were startling to us because we strongly believe it's in a property manager's best interest to know if their tenants are potential credit -- and/or criminal -- risks," Mauseth said. "This is of particular importance to individuals renting out a room or adjacent apartment to one's primary living quarters. Since nearly half of the property managers we surveyed will not pursue tenants that skip out on payments, it's important that they do their due diligence before renting out an apartment to ensure no revenue is lost. Two ways they can do this are by using rental screening services such as TransUnion SmartMove, www.MySmartMove.com for small and independent property managers and CreditRetriever for large property management companies."
Other key survey findings include:
The survey found that 39 percent of respondents said they are seeing an increase from last year in applicants moving to rental units from foreclosed properties. This is slightly less than the 40 percent figure reported in 2009.
Rental property managers said almost 3 out of 10 (29 percent) tenants expressed concern in providing credit information about 24 percent expressed concern in providing Social Security numbers.
Approximately 77 percent of respondents said ID theft prevention is important to their business. More than half (51 percent) said it was very important.
For more information about the survey and TransUnion Rental Screening Solutions, please visit www.transunion.com/rentalscreening. TransUnion provides rental screening solutions to both large property management companies and independent landlords. By applying analytic scoring models to comprehensive credit and criminal background data, TransUnion provides property managers with screening tools to make faster, more well-informed leasing decisions. As a result, property managers can improve their resident profile to increase cash flow and decrease costs.
As a global leader in credit and information management, TransUnion creates advantages for millions of people around the world by gathering, analyzing and delivering information. For businesses, TransUnion helps improve efficiency, manage risk, reduce costs and increase revenue by delivering comprehensive data and advanced analytics and decisioning. For consumers, TransUnion provides the tools, resources and education to help manage their credit health and achieve their financial goals. Through these and other efforts, TransUnion is working to build stronger economies worldwide. Founded in 1968 and headquartered in Chicago, TransUnion employs more than 3,600 employees in 25 countries on five continents. www.transunion.com