A new TransUnion analysis on the apartment rental market found that the average rent for the nation increased 4.4% from $829 in the first quarter of 2011 to $865 in the first three months of 2012. However, many major rental markets experienced declines in prices during this same timeframe.
For the purposes of this analysis and to ensure the validity of the information, national data was collected from property managers utilizing TransUnion's rental screening solutions in both 2011 and 2012. More than 130,000 rental applications were reviewed.*
In addition to reviewing national data, TransUnion analyzed trends in 10 major rental markets, including the Atlanta, Chicago, Dallas, Denver, Houston, Los Angeles, Las Vegas, Phoenix, San Diego and Washington, D.C. metropolitan statistical areas (MSAs). Contrary to the national data, six of those markets experienced declines in rental prices between Q1 2011 and Q1 2012.
The largest year-over-year percent declines in rental prices were observed in Denver (-8.8%), Chicago (-4.8%) and Los Angeles (-2.6%). Atlanta was the only market that saw a significant rise in rental prices, increasing 6.3% from $737 to $783 between Q1 2011 and Q1 2012.
"It's not a surprise that rental prices increased in the first quarter as recent industry data revealed that vacancy rates reached their lowest levels since 2001," said Mike Mauseth, president of TransUnion Rental Screening Solutions. "Our data highlights the fact that rental markets must truly be observed city by city as there are differences even in the largest metro areas situated relatively close to each other. For instance, our analysis revealed that rental prices dropped in Houston and Los Angeles while they increased in Dallas and San Diego."
TransUnion's analysis also found that the average amounts landlords take for deposits at lease signing between Q1 2011 and Q1 2012 increased from $279 to $292.** Of the analyzed markets, only Dallas and San Diego saw a decline in average deposits.
With rental property demand increasing, some property managers are now tightening their criteria for potential applications that are accepted without any conditions such as a higher deposit amount. Based on a proprietary decisioning algorithm where property managers may determine the weight of certain selection variables, TransUnion's analysis found that of those property managers that made changes to these measures, their acceptance criteria tightened by 1.9%.
"Property managers are aware of their local markets and while the far majority of them did not make any changes to their acceptance criteria, the small percentage that did, followed the basic tenets of supply and demand. The end goal for them is to ensure they are securing the most reliable tenants for their properties," said Steve Roe, vice president of sales for TransUnion's rental screening business unit. "Finding trustworthy tenants is critical, even more so in a strong market, as property managers can lose thousands of dollars if their resident turns out to be unreliable."
Property managers have the ability to conduct due diligence while screening for tenants by using rental screening services such as TransUnion CreditRetriever (www.transunion.com/creditretriever
) for large property management companies and TransUnion SmartMove (www.MySmartMove.com
) for independent landlords.
TransUnion is a leading global provider of information and risk management solutions to businesses across multiple industries and to individual consumers. The Company's technology and services enable businesses to make more timely and informed credit granting, risk management, underwriting, fraud protection and customer acquisition decisions by delivering high quality data, and by integrating advanced analytics and enhanced decision-making capabilities. TransUnion's interactive website provides consumers with real-time access to their personal credit information and analytical tools that help them understand and proactively manage their personal finances. Through these and other efforts, TransUnion is working to build stronger economies worldwide. Founded in 1968 and headquartered in Chicago, TransUnion provides services in 32 countries on five continents. www.transunion.com/business* Year-over-year samples may have changed based on customer/property mix.
** Average deposit data is based on amounts provided to TransUnion from property managers for tenants who would be accepted under the property's standard offer for a unit.