MHN Interview: TransUnion Data Shows Vacancies Decreased But Rents Stayed the Same
Recent findings from TransUnion, a provider of risk management solutions, showed that while, on average, vacancy rates have decreased, rents have remained steady.
By Jessica Fiur, News Editor
Denver—Recent findings from TransUnion, a provider of risk management solutions, showed that while, on average, vacancy rates have decreased, rents have remained steady.
MHN interviews Mike Mauseth, president of TransUnion Rental Screening Solutions, and Steve Roe, vice president of sales for TransUnion’s rental screening business unit, on this surprising discovery, as well as the importance of selecting the “right” resident.
MHN: How did you gather your data?
Mike Mauseth: 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 2010 and 2011. More than 200,000 rental applications were reviewed from TransUnion CreditRetriever for large property management companies and TransUnion SmartMove for independent landlords. So it is a fair representation of the entire rental unit market.
MHN: Describe some of your most interesting findings. For example, you reported that vacancy rates have been the lowest they’ve been in years, but on average, rents haven’t increased. What are your thoughts on this?
Steve Roe: That was an interesting finding. The demand is increasing, so therefore the vacancy rates are dropping. With that, you would think that rents would increase. But when we looked at it across the board, and as Mike said, it was a straight average, it decreased a little bit. But with that being said, when you break things out by region, we did see a lot of different regions increase also. So both coasts—Denver, we called out specifically—and some of the areas, were more in line with expectations. It was interesting to see the overall decrease. Maybe the economy is still weighing on things, with the unemployment rate still higher than we’d all like it.
MHN: Do you think until the economy is fixed, this will continue for the next couple of quarters?
Roe: It’s hard to say. I think that’s what everybody would like to know, but if I had to guess, I’d say we’d see rents leveling out. I think our expectation is that vacancy rates will stay where they are, maybe drop a little bit more, but we’re also seeing more supply come on as we move throughout the year—new buildings, and people bringing single family homes out to the market. It’s really tough to say right now where things will end up.
MHN: You mentioned more buildings were being built. Did the rents have to become competitively priced to attract residents?
Roe: I think that can be some of that, but we’re also seeing as the new units coming on, and I don’t think we’re seeing a ton yet, but as people are trying to do lease ups for many buildings, I think they do offer some sort of enticement to get them into the lease.
MHN: In your results, there was also mention of the importance of finding the “right” resident. What did you mean by this?
Mauseth: With both of our screening platforms, customers can configure how selective they want to be, based on risks they want to take on: risk of bad debt, risk of eviction, risk of property damage. What we have seen is that a good majority of people hadn’t changed their criteria in terms of collecting security deposits. But those who decided to change their screening criteria changed it by a couple of percentage points. So they’d want them to be someone who scored higher in our system before they’d rent to them on certain terms.
MHN: Any other interesting findings?
Mauseth: The industry took a big step in terms of reducing rent when the economy hit the wall in 2008. People weren’t interested in buying homes, but they also weren’t necessarily interested in renting an apartment—they were interested in staying with a roommate or moving back home. We’re seeing rents in some markets coming back up, but we should keep in mind that it dropped significantly in the last few years, and now we’re in Denver where the economy is a little more stable, the unemployment number is a little bit better than the national average, you’ll see a little increase in rents, but it’s still way off from where we were in 2007.
MHN: With the improving economy, for example, in Denver, are people less likely to live with a roommate now and more likely to rent their own place?
Mauseth: That’s what we’ve seen, historically. As the economy improves and somebody has more income to spend on rent, people choose to not live at home, or not live with several roommates. I know I did.
