How much will your home rent for?
Image by Match Financial via Flickr
Date :July 29, 2013 |Author: Jennifer Chan
According to the results of CoreLogic’s quarterly study, Renter Applicant Risk, tenant credit risk has steadily been improving over the last two years. For landlords, this means seeing more qualified applicants, reduced risk of residents who can’t pay the rent on time, and more renters who are able to meet their lease obligations.
Other good news the study unveiled was an increase in applicant income as well as an increase in the number of renters with a housing budget of more than $1,100 a month. Average renter incomes rose across the nation: average applicant monthly income for units over $1,100 was $4,528, an increase of 1.4 percent from the previous year. Tenants renting apartments between $750 and $1,100 saw an income rise of 0.2 percent, while those renting for less than $750 had an average income rise of 0.4 percent.
While credit scores and incomes are rising, the rent-to-income ratio is also increasing year over year, which means renters are facing tighter budgets in order to afford high-quality apartments. Renters in the top tier, paying more than $1,100 per month for their apartment, have a rent-to-income ratio of 22.9 percent per lease, an increase of 7 percent year-over-year. The ratio for the middle tier of renters, paying between $750 and $1,100, is 21.7 percent, with a year-over-year increase of 11.2 percent. Renters with rent less than $750 have a rent-to-income ratio of 21.9 percent and see 10.1 percent increase year-over-year.
The credit risk study, which also looked at separates regions in the U.S., found that renter applicant risk was the lowest in the Northeast. Coming in second is the West, with the Midwest and Southern regions in a tie for third. Head on over to CoreLogic’s website to read more about the study.