CoreLogic Releases First Quarter 2013 Renter Applicant Risk
July 18, 2013, Irvine, Calif. –
—Year-Over-Year Comparison Shows Improved Applicant Credit Quality—
CoreLogic® (NYSE: CLGX), a leading residential property information, analytics and services provider, today released its CoreLogic Renter Applicant Risk (RAR) Index Report for the first quarter of 2013. The index shows a two-point year-over-year increase to a value of 104. The rise in the index is a sign of improving ability to meet lease obligations among prospective apartment renters nationwide.
Published quarterly, the RAR Index Report provides market-based benchmarks for evaluating credit quality and risk of default among renters applying for apartment homes in multifamily housing units and single-family rentals. Using a mean of 100, an index value above 100 indicates improved applicant credit quality and decreased lease default risk, and a value below 100 indicates declining applicant credit quality and increased lease default risk.
“It’s encouraging to see better qualified applicants who are more likely to meet their lease obligations,” said Jay Harris, senior director, CoreLogic SafeRent. “As the economy continues to grow slowly, conditions appear cautiously optimistic for continued improvement in renter applicant qualifications in the year ahead. During this relatively upbeat period, renter trends are pointing toward increased confidence among property owners and applicants.”
Figure 1: United States Renter Applicant Risk Index Data
National Renter Trends as of First Quarter 2013
- Fewer prospective residents apply: Renter applicant traffic nationally was down slightly on a same-store basis (measuring the same properties over time). Year over year, the CoreLogic index measuring applicant traffic for the same properties* decreased by 5.4 percent for Class A properties. The index decreased by 3.7 percent for Class B properties and the index decreased by 4.4 percent for Class C properties.
- Applicant incomes rise: In the first quarter of 2013, applicants’ incomes inched up slightly across all property classes, along with rent-to-income ratios. On a year-over-year basis, the average monthly applicant income for Class A properties was $4,528, an increase of 1.4 percent. For Class B properties, it was $2,895, an increase of 0.2 percent and for Class C properties, it was $2,047, an increase of 0.4 percent.
- Rent-to-income ratios rise: In first quarter of 2013, the average rent-to-income ratio for Class A properties was 22.9 percent per lease, a year-over-year increase of 7.0 percent. For Class B properties, the average rent-to-income ratio was 21.7 percent per lease, a year-over-year increase of 11.2 percent. For Class C properties, the average rent-to-income ratio was 21.9 percent per lease, a year-over-year increase of 10.1 percent. Rising rent-to-income ratios could indicate that individuals are stretching their budgets to afford higher quality properties.
- Lower-priced rentals see more significant decreases in rent amounts: The average rent amount for Class A properties in the first quarter of 2013 was $1,571, a year-over-year decrease of 0.8 percent. At the same time, the average rent amount for Class B properties increased by 0.1 percent to $874, while average rent amounts for Class C properties decreased by 1.3 percent year over year to $554.
*CoreLogic tracks apartment activity by property classes to more accurately reflect market trends. National property classes include:
- Class A: Properties with rents greater than $1,100
- Class B: Properties with rents between $750 and $1,100
- Class C: Properties with rents less than $750
Regional Renter Applicant Risk Index Data
Among the nation’s four regions, the Midwest had the lowest RAR Index value in the first quarter of 2013, reflecting the lowest applicant credit quality, followed by the South, Northeast and West (see Figure 2). Comparing the first quarter of 2013 to the same period in the previous year, the index increased two points in the Midwest, three points in the South, remained flat in the Northeast, and increased three points in the West.
Figure 2: Regional Renter Applicant Risk Index Data
The report is available: Renter Applicant Risk (RAR) Report - First Quarter 2013
The CoreLogic Renter Applicant Risk (RAR) Index Report is published quarterly by CoreLogic SafeRent®. The RAR Index is calculated exclusively from applicant-traffic credit quality scores from the CoreLogic SafeRent statistical lease screening model, Registry ScorePLUS®, and is based on an analysis of 31,000 properties representing apartment homes and single-family rentals. The index provides a benchmark trend of national and regional traffic credit quality scores. The index value indicates the relative risk of an applicant pool fulfilling lease obligations. A risk index value of 100 indicates that market conditions are equal to the national mean for the index’s base period of 2004. A risk index value greater than 100 indicates market conditions with decreased average risk of default relative to the index's base period mean. A value less than 100 indicates market conditions with increased average risk of default relative to the index's base period mean. Registry ScorePLUS is the multifamily industry’s only screening model that is both empirically derived and statistically validated. The statistical screening model was developed from historical resident lease performance data to specifically evaluate the potential risk of a resident’s future lease performance. The model generates scores for each applicant indicating the relative risk of the applicant not fulfilling lease obligations.
CoreLogic (NYSE: CLGX) is a leading property information, analytics and services provider in the United States and Australia. The company’s combined data from public, contributory and proprietary sources includes over 3.3 billion records spanning more than 40 years, providing detailed coverage of property, mortgages and other encumbrances, consumer credit, tenancy, location, hazard risk and related performance information. The markets CoreLogic serves include real estate and mortgage finance, insurance, capital markets, transportation and government. CoreLogic delivers value to clients through unique data, analytics, workflow technology, advisory and managed services. Clients rely on CoreLogic to help identify and manage growth opportunities, improve performance and mitigate risk. Headquartered in Irvine, Calif., CoreLogic operates in seven countries. For more information, please visit www.corelogic.com.
CORELOGIC, the CoreLogic logo, SAFERENT and REGISTRY SCOREPLUS are trademarks of CoreLogic, Inc. and/or its subsidiaries.