National Index Shows Less Risk Among Renters
- May 23, 2008
By Erika Schnitzer, Associate EditorRockville, Md.–According to First Advantage SafeRent Inc.’s first quarter Multifamily Applicant Risk (MAR) Index, the risk of leasers not fulfilling their payment obligations has decreased slightly as compared to the end of last year.The MAR Index measures trends of both national and regional applicant quality scores. An Index value of 100 denotes that market conditions are equal to the national mean for the base period of 2004. A value greater than 100 reflects conditions with a reduced average risk of default on payment.“Property owners can use this to understand how their experiences compare to the market as a whole,” says Jay Harris, vice president of business services at First Advantage SafeRent. “Depending on the situation, companies may have more pricing power than they think.”The first-quarter U.S. MAR Index, which included studios, one-, two-, three- and four-bedroom units, increased 1 to 100 percent, up from the fourth quarter of 2007. This is the same value as in the first quarter of 2007. In comparing the size of the units, the MAR Index is slightly higher, at 101, for one-bedroom than for two-bedroom units.“The foreclosure problem is not having a real negative impact on the quality of renters who are coming in to rent,” Harris tells MHN. “The vast majority of renters who have bad mortgage history still qualify to rent. That’s showing up in these numbers.” Additional factors explaining the overall increase in applicant reliability, says Harris, include leasers choosing to rent rather than purchase homes and well-qualified first-time renters. “Renters-by-choice is the fastest growing group in multifamily.”Of the 37 major markets studied, Harris explains, 19 had increased Index values from the first quarter of last year.The Regional MAR Index shows that the Northeast has the highest Index value in the nation at 110, while the Index for the Midwest and South has decreased to a value of 97. The Metropolitan Statistical Areas (MSA) with the most significant decreases in the Index for one year were Dallas/Fort Worth, Texas; Denver/Boulder/Greeley, Colo. and Memphis, Tenn. The MSAs with the highest increases in the Index were Austin/San Marcos, Texas; New York/Northern New Jersey/Long Island and Nashville, Tenn.