Risk Levels of Rental Applicants Improving, But Property Managers Still Face Challenges
June 15 2018 - 6:01AM
Risk levels of renters continued to improve at the beginning of
2018, especially in cities where jobs are strong and rental prices
remain affordable. These findings from TransUnion (NYSE:TRU) Rental
Screening Solutions were released today at the National Apartment
Association’s 2018 Apartmentalize conference in San Diego.
TransUnion’s new analysis examined current and prospective
renters across the top 50 U.S. MSAs (Metropolitan Statistical
Areas), comparing Q1 2018 to Q1 2017. According to TransUnion’s
ResidentScoreSM, 34% of renters now have scores of 720 or higher as
of Q1 2018. Just one year earlier, 32% of renters had such scores.
ResidentScore is TransUnion’s rental housing-specific score, which
uses credit attributes to predict the likelihood a renter will be
evicted or “skip” out of their rental unit without paying within 12
months. The score ranges from 350-850 with a higher score
indicating a lower expected risk of eviction or skip.
“Strong local economies coupled with low unemployment rates are
likely driving the improvement in the average ResidentScore," said
Mike Doherty, senior vice president in TransUnion’s rental
screening business. “This is positive news for renters as fewer
applicants are likely to be declined or be subject to higher
deposits. For property management companies, this is a major plus
as the likelihood of evictions, which can cost thousands of
dollars, drops precipitously when renters have a higher
ResidentScore.”
ResidentScore Distribution |
ResidentScore |
Percentage of Renters Q1 2017 |
Percentage of Renters Q1 2018 |
720+ |
32 |
% |
34 |
% |
700-719 |
4 |
% |
4 |
% |
680-699 |
3 |
% |
3 |
% |
660-679 |
12 |
% |
13 |
% |
640-659 |
3 |
% |
3 |
% |
620-639 |
4 |
% |
4 |
% |
600-619 |
8 |
% |
8 |
% |
580-599 |
11 |
% |
9 |
% |
560-579 |
12 |
% |
11 |
% |
540-559 |
5 |
% |
5 |
% |
< 540 |
6 |
% |
5 |
% |
ResidentScore distribution improved in the three largest MSAs.
In New York, the percentage of renters with a ResidentScore of 720+
increased to 42% in Q1 2018 from 40% in Q1 2017. The percentage
also increased in the same timeframe for Los Angeles (to 36% from
34%) and Chicago (to 33% from 31%).
While more renters are performing better from a risk
perspective, property management companies still face challenges.
Only 6% of the rental population sampled in this study had a
ResidentScore of below 540. Yet, nearly 42% of those sampled in
this study that scored below 540 at lease signing were evicted or
skipped out on the lease after 15 months. When projected across the
entire renter population, this represents approximately two billion
dollars in balances left owed. On average, renters that skip out on
a rental unit owe their property manager $4,215.
“When property management companies are steady on their accept
or decline criteria, they are declining fewer applicants and the
population they are accepting is expected to perform better,”
Doherty added. “Yet, some property management companies should
still consider tightening their criteria because it’s clear that
applicants with low ResidentScores are far more likely to skip out
on a lease or be evicted, causing major losses to property
managers.”
Rental Credit Performance as of March 2018 for
Renters that Started Leases in 2016 |
ResidentScore |
Cumulative Evictions & Skips at 15
Months |
720+ |
1.1 |
% |
700-719 |
1.8 |
% |
680-699 |
2.0 |
% |
660-679 |
2.2 |
% |
640-659 |
3.0 |
% |
620-639 |
4.6 |
% |
600-619 |
7.4 |
% |
580-599 |
13.8 |
% |
560-579 |
17.7 |
% |
540-559 |
24.9 |
% |
< 540 |
41.9 |
% |
“This analysis is especially important as ResidentScores paint a
more complete picture for property management companies and can
help them attract higher quality residents,” concluded Doherty.
The study examined more than 500,000 move-ins and payment
performance over a 15 month-period as reported by property
managers.
For more information about TransUnion’s rental screening
solutions, please click here.
About TransUnion (NYSE:TRU) Information is a
powerful thing. At TransUnion, we realize that. We are dedicated to
finding innovative ways information can be used to help individuals
make better and smarter decisions. We help uncover unique stories,
trends and insights behind each data point, using historical
information as well as alternative data sources. This allows a
variety of markets and businesses to better manage risk and renters
to better manage their credit, personal information and identity.
Today, TransUnion has a global presence in more than 30 countries
and a leading presence in several international markets across
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families and safer communities worldwide.
We call this Information for
Good. http://www.transunion.com/business
Contact |
Dave
Blumberg TransUnion |
E-mail |
david.blumberg@transunion.com |
Telephone |
312-985-3059 |
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