Credit Quality of Renter Applicants Improving as Incomes Inch Up

Credit Quality of Renter Applicants Improving as Incomes Inch UpThe number of applicants seeking to rent properties nationwide was down slightly in the first quarter compared to a year ago.
But the credit quality of rental property applicants improved nationwide in the first quarter from a year ago, according to CoreLogic’s Renter Applicant Risk Report released Thursday.
CoreLogic‘s index provides market-based benchmarks for evaluating credit quality and risk of default among renters applying for apartment homes in multifamily buildings and single-family rentals.
The data shows that the nationwide index is at a value of 104. This compares to an index value of 102 in the first quarter of 2012 and an index value of 99 in the first quarter of 201
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.
“As the economy continues to grow slowly, conditions appear cautiously optimistic for continued improvement in renter applicant qualifications in the year ahead,” Jay Harris, senior director, CoreLogic SafeRent. “During this relatively upbeat period, renter trends are pointing toward increased confidence among property owners and applicants.”
Applicant incomes inched up slightly across all property classes, with the largest increase among those applying to properties that rent for more than $1,100 monthly.
Incomes of applicants to properties renting for more than $1,100 a month grew 1 percent from a monthly average of $4,467 in the first quarter of 2012 to $4,528 in the comparable quarter of 2013.
Incomes of applicants to properties renting from $750 to $1,100 a month grew 0.2 percent from a monthly average of $2,888 in the first quarter of 2012 to $2,895 in the first quarter of 2013.
Those applying to properties renting for less than $750 a month saw their incomes rise 0.4 percent from a monthly average of $2,039 in the first quarter of 2012 to $2,047 in the comparable quarter of 2013.
Lower-priced rentals experienced the biggest year-over-year average decrease, with Class C properties declining by 1.3 percent to an average of $554 a month.
Class A properties decreased 0.8 percent, from $1,584 in the first quarter of 2012 to $1,571 in the first quarter of 2013.
At the same time, the average monthly rent amount for Class B properties rose by 0.1 percent to $874 in the first quarter of 2013 from $873 in the comparable quarter of the previous year.

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