All posts by Manjit Sohal

Property managers and landlords nationwide aim to attract reliable, long-term tenants. Gaining insight into modern renters—their tenant data, financial situations, lifestyle choices, and key priorities—gives proactive property owners and managers a competitive edge in appealing to the ideal tenant. While certain elements of the rental landscape are not within the control of market professionals, knowledge is power, and understanding the preferences, spending habits, and profiles of today’s renters can inform their business approach and success. To understand today’s renter, Experian® took a deep dive into the tenant data of the rental market landscape in its 2024 report on the U.S. rental market. Among the principal findings, Generation Z and younger millennials' dominance in this sector is rising. Today’s Renter Profile Experian research reveals movements in the demographics of the average U.S. renter, now dominated by younger individuals and lower average-income consumers. These renters face challenges as they navigate the rising costs of securing housing. The 2024 rental report delves into these changes, highlighting age and income level shifts in tenant data. Critical to property managers and landlords, this information offers an understanding of their customer base and provides insight into the rental market landscape. Gen Z on the Rise: Gen Z alone accounts for 30.5% of all renters, and their numbers are increasing, up 3.5% over a year. Gen Z and younger millennials (adults under 35) represent over 50% of the rental population. Income Declines: From January 2023 to January 2024, the tenant data showed the average income of RentBureau® renters fell from $53,100 to $52,600[1]. Higher Rent Costs: In 2024, over 50% of renters paid $1,500+ per month, with the average U.S. renter's monthly payment of $1,713. Gen Z,the youngest renter population, spends an average of $1,600 monthly on rent. This context plays an important role in examining the state of the 2024 rental market. Propensity to Move In addition to age and economic well-being, landlords should take a keen interest in tenant data related to renters’ moving habits, as these provide valuable insights into behavior and market trends. Landlords generally prefer longer-term leaseholders, and renters who stay longer provide more stability to property management efforts. Not surprisingly, generational trends appear here as well. While over 90% of all renters retained one lease over a 2-year period, tenant data indicates that Gen Z and younger millennial renters tend to move more than other age groups. This tendency stems from various factors, including a willingness to relocate to more affordable regions or areas that better suit their lifestyle preferences. With today’s evolving work environment, remote work has opened new possibilities. Again, the overarching trend is that renters stay in one place for two years. In fact, this represents 92.5% of all renters. Signs of Overall Renter Financial Health Housing is a significant monthly cost of living expense, especially for many younger adults just starting out and lower-income individuals and families. The percentage of a renter’s monthly income allocated to rental costs clearly indicates housing affordability. This tenant data reflects that higher rent-to-income ratios (RTIs) signify that renters have less financial flexibility, as a larger portion of their monthly income is allocated to rent, leaving less available for essentials, savings, and discretionary spending. On average, renters spend over 44% of their monthly income on rent, and low-to-moderate-income renters dedicate over 50% to rent. General guidelines suggest that the percentage should be no more than 30%. Higher rental costs and declining annual incomes disproportionately impact those with fewer financial means. Credit and Other Signs Landlords and property managers value tenant data, such as renter applicants' stability. Indicators such as overall credit quality and negative payment history provide valuable insights into economic well-being. While negative payment history has improved slightly, the market shows a rise in delinquencies. Experian’s research highlights that while credit scores for the general U.S. population are on the rise, the trends for renters tell a slightly different story. Between May 2023 and May 2024, tenant data revealed a 2% increase in renters fell into the near-prime and subprime credit categories. Although the implications for the future remain uncertain, this data, combined with other analytics, may offer clues about market trends and opportunities. The Future The demand for rentals remains high, particularly among young adults and lower-income households. As the economy and market forces fluctuate, so do the financial pressures on renters and rental housing availability and costs. The role of young adults and lower-income households in the rental market will continue. Landlords and property managers must tune in to demographic realities in their efforts to develop risk management and success strategies. To learn more about the state of the U.S. rental market, download Experian’s 2024 rental report. [1] RentBureau income is based on modeled income, which is estimated using credit data and other predictive factors.

Transformations in today’s U.S. rental market reflect changing economic and market forces. These dynamic times present challenges and opportunities for property managers and landlords seeking more stability and consistency in their property occupancies. The real estate industry responded positively to the Federal Reserve's recent announcement to cut interest rates by a quarter percentage point, marking a favorable shift from previous actions that kept rates steady. However, uncertainty lingers about the extent and pace of changes in the residential real estate market, including the rental and buying sectors. Experts remain optimistic, predicting improvements as the market heads into next year's busy season. Landlords and property managers looking to attract more stable renters need to understand macro- and micro-market trends, renter demographics and preferences, and other information impacting their specific locales. Experian Housing published its 2024 report on the U.S. rental market, which provides data-driven insights into the current rental landscape. Experts examined today’s renter population, current market trends, the state of housing development, and the market’s future. Who is today’s renter? Today’s renter is still navigating financial constraints and potential marketplace affordability challenges. While location-specific information does influence the affordability of renting versus buying a home, on average, affordability remains an important factor guiding consumer decision-making. Our latest rental report highlights a notable shift in the rental market, with a growing number of younger renters and a decline in the average annual income among renters. According to Experian’s RentBureau®1, over 30% of renters are Generation Z—the youngest adult demographic. Expanding this to include individuals under 34 years old, younger renters now represent over half of all renters in the United States. Experian’s research highlights a shift in rental spending trends, showing the average income for renters now at $52,600. RentBureau data underscores the evolving financial landscape, with rent-to-income (RTI) ratios reflecting a growing commitment to housing. On average, individuals allocate 44.1% of their income to rent, while low-to-moderate-income households dedicate 52.5%. These figures exceed the traditional guideline of keeping rent within 30% of gross monthly income, underscoring the significant economic pressures faced by renters, particularly those with low-to-moderate incomes, as they navigate rising housing costs and limited affordability in the current market. This reality highlights the urgent need for broader systemic solutions to address housing availability and affordability challenges. What is happening in the rental market? Rental market trends reflect several factors, including changes in renter demographics, interest rates, housing supply and demand, and the economy. Overall, vacancy rates have stayed relatively low, which has resulted in rising rent prices, although there are signs of flattening. With fewer housing options available, many renters stay put for longer, which also contributes to availability and affordability. More renters, over 50% of all renters (a 10% increase over May 2023), are paying $1,500 or more in monthly rent, and the nationwide average rent stands at $1,713. A regional look offers greater specific insights for landlords and property managers, which is critical for truly understanding the marketplace. In 2024, 43 of 50 states have RTI ratios above the suggested guideline of 30%. California has the highest median RTI at just over 46%, followed by Massachusetts, Florida, Washington, and New Jersey. Other states facing increasing RTI ratios include Georgia, North Carolina, Colorado, Texas, and Nevada. These high ratios negatively affect affordability. At the same time, Experian Housing research indicates that over 92% of renters hold a single lease over two years. Data also shows 6.7% of renters with two leases in 24 months and others moving three or more times in this timeframe. Older generations, surprisingly, are moving more now than in recent years. Where is development headed? High mortgage rates are constraining housing development, especially for affordable entry-level homes. Roughly 50% fewer starter homes are being built, and multifamily new construction also faces constraints. With that said, multi-family housing units already under construction are coming to market. These units are generally high-end, contributing to increased rental prices. The supply coming to the market is higher-priced due to greater construction costs across the board. Contributors to the rising costs include builds in pricier metropolitan areas as well as features and modern amenities sought after by younger renters. The U.S. Census Bureau reports a slight uptick in new home construction since July 2023. How is the future looking? The U.S. economy is expected to remain stable, which should benefit renters and landlords alike. The outlook for the rental market in 2024 and 2025 remains optimistic with inflation down and the Fed rate cut, but many other factors come into play, specifically, overall economic health and the state of the employment market. For renters, the best tact is to set goals to improve their overall credit profiles and opportunities in the housing market. Individuals benefit from rent reporting. Experian RentBureau helps renters build credit profiles and open the best opportunities for the rental market and moving to the first-time homebuyer market. With rental housing still in high demand, property managers and landlords should focus on tenant screening, rent reporting, and fraud prevention as part of their risk management strategies. Focusing on these areas will increase the chances of finding quality, longer-term tenants. To learn more about the state of the U.S. rental market, download Experian Housing’s 2024 rental report. Access report 1 RentBureau® is the largest rental payment database that contains more than 36 million renter profiles. While RentBureau doesn’t represent the total U.S. rental market population, internal studies reveal RentBureau data aligns closely to historical U.S. Census data studies, which provides confidence in the deeper understandings aggregated in the report.

Signing new residents is not just about offering the right apartment home at the right price. Granted, that's obviously a huge part of the equation, but operators also need to provide prospective residents with a seamless shopping and leasing experience. If potential renters encounter any friction or hardships during this time, they are likely to take their home search elsewhere. Today's prospective renters want to be able to tour and gather information about apartments on their own time, and they want a quick "yes" or "no" after completing their lease application. With that in mind, automated income and employment verification - among other tools and solutions like self-guided and virtual tools, chatbots, and automated form fills, is one of the main features and technologies operators should consider implementing if they haven't already done so, to ensure we are meeting the renter where they are. Automated verification of identity, income, assets and employment For leasing managers, automated technology eliminates the need to manually collect the documents required to verify a prospect's self-reported information, which can be a tremendously time-consuming task that extends the overall leasing timeline and increases the exposure due to unoccupied units. Automated verification also reduces the opportunity for bad-faith applicants to submit fraudulent documents related to their financials or employment history. The best part about verification is the variety of options available; leasing managers can pick and choose verification options which meet their needs without breaking the tenant screening budget. Experian has multiple verification solutions and use cases to compare which one may work best for your community. The Experian difference To learn more about our suite of rental property solutions and ways we support the tenant screening process with data-driven insights, and verifications, please visit us at  www.experian.com/rental. This article was originally published on MFI. Read more on MFI for a detailed look at additional tools and technologies operators should consider. 

This article was originally published on multifamilyinsiders.com One of the challenges currently facing the rental housing industry is the amount of lease application fraud. An Entrata study found a 111% increase in lease application fraud between 2019 and 2020. In the same study, 55% of surveyed apartment managers and rental operators said their properties experience fraudulent lease application attempts every few months, and 15% said their communities were subjected to multiple attempts each month. One-third of respondents described themselves as "very concerned" about application fraud. Just as alarming as the rise in attempts is the apparent likelihood of success. In the study, 65% of apartment managers said they are not confident in their current fraud prevention efforts. Some applicants can use a range of tools to commit fraud such as fake pay stubs, bank statements, employment records, and other falsified documents. Unfortunately, readily available computer technology makes it all too easy for applicants to produce these falsified documents. Tools to fight against fraud Apartment communities that rely on an overly manual screening process may find themselves at a disadvantage in the current landscape. Relying on associates to manually verify things like income and employment history can increase the risk of a deceitful applicant being successful. In addition, these processes can be extraordinarily time-consuming, which means leasing associates have less bandwidth for their many other important duties and responsibilities. Not to mention, the units stay unoccupied while these time-consuming verifications are being done manually. Among the general screening technologies that operators should consider: Automated verification of income, assets and employment — These solutions eliminate the need for operators to collect this kind of documentation from applicants. Furthermore, it eliminates the opportunity for applicants to supply falsified supporting documentation. Frictionless authentication — A multi-layered identity verification process for those applying for rental housing, frictionless authentication detects the subtle and not-so-subtle signs that an applicant is, to one degree or another, using a false identity. By highlighting discrepancies, the process assigns a “score” to quantify the likelihood that misrepresentation is taking place. Additional confirmation of the applicant’s identity can be completed using a one-time passcode (OTP) or knowledge-based authentication (KBA). This technology also uses device intelligence to recognize the risks associated with the physical devices (such as computers, tablets, and smartphones) that consumers use for online applications to identify potential imposters. In today's landscape, apartment owners and operators need to make sure they're protecting themselves against fraudulent applicants, who may not fulfill their financial obligations as outlined in their leases. By embracing the ever-growing array of advanced screening tools and technologies, owners and operators can achieve that protection and reduce their risk significantly — and save their associates time and energy.

Recent statistics certainly illustrate why many renters are feeling anxious lately. More than 40% of renter households in the U.S. — that’s 19 million households — spent more than 30% of their total income on housing costs during the 2017–2021 period, according to the U.S. Census Bureau’s new American Community Survey (ACS). Households that spend more than 30% of their income on housing costs — including rent or mortgage payments, utilities, and other fees — are considered “housing cost burdened” by the U.S. Department of Housing and Urban Development. Digging a little deeper, nearly 8% of the nation’s 3,143 counties had a median housing cost ratio for renters above 30% during the five-year period, according to ACS, and nearly a third of all U.S. renters lived in these counties. Unsurprisingly, 60% of Americans say they’re “very concerned” about the cost of housing, according to the Pew Research Center. The financial plight of renters today underscores the importance of incorporating renter payment history into screening efforts. It also indicates why reporting positive rent payments to credit bureaus can be such a powerful amenity. Rental data: The key to optimizing the screening process Simply put, a screening process that includes an applicant’s rental payment history provides a more comprehensive understanding of their risk profile and likelihood of paying rent on time and in full. That’s especially critical in an environment when paying rent can be something of a financial burden for many. Wouldn’t an apartment manager want to make a leasing decision by taking into consideration every possible bit of relevant data, especially the most relevant data available — rental payment history? Credit scores are often at the heart of an operator’s screening process. A credit score can give a very general sense of the risk posed by a prospect, but it doesn't provide crystal-clear insight into the likelihood of an applicant paying their rent on time and in full. Even people who are financially responsible and diligent about paying their rent can find themselves with less-than-ideal credit scores. Maybe they were injured in an accident, came down with a serious illness or lost their job, and then suffered a host of financial consequences that harmed their credit score. It can't be assumed people who have been through these situations won't pay their rent on time. At the same time, especially given the burden rent payments pose for many renters, reporting positive payments to credit bureaus can serve as an effective way to attract residents. Unfortunately, unlike homeowners, apartment residents traditionally have not seen a positive impact on their credit reports for making their rent payments on time and in full, even though these payments can very large and usually make up their largest monthly expense. Rental reporting According to the Credit Builders Alliance (CBA), renters are seven times more likely to be credit invisible — meaning they lack enough credit history to generate a credit score — when compared to homeowners. But by reporting their on-time rent payments to credit bureaus, apartment communities can help renters build their credit histories, which can make it easier for them to do things such as secure a car loan or credit card — and to do so at favorable interest rates. Additionally, rent reporting gives residents a strong incentive to pay their rent on time and in full. And it can provide apartment communities with a competitive advantage since this financial amenity is not widespread throughout the rental-housing industry. The data is clear: this is a challenging time for many renters. But by making rental payment histories part of their screening, operators can minimize their risk. And by reporting positive rental payments, they can attract residents and help them build a better financial future. To learn more about Experian’s largest rental payment database and how to start reporting with us, visit us online. Experian RentBureau™

Believe it or not, 2023 is underway, and the new year could prove to be a challenging one for apartment operators in certain ways. In 2021 and into the beginning of 2022, demand for apartment rentals approached record levels, which shrunk vacancy rates and increased monthly rents. The rest of the year remained stagnant while other regions saw some decline, but inflation and other economic factors have many apartment communities confronted with labor shortages, and other challenges which can certainly make leasing and operating properties difficult. Against that backdrop, here are some of the technologies and solutions operators should consider for optimizing their success and efficiencies in 2023 and beyond. Tools that allow prospective residents to have a fully digital and contactless leasing experience — During the pandemic, many operators rushed to implement virtual tours, onsite self-guided tours and other solutions that allowed prospects to apply for and finalize their leases remotely. Prospective renters have undoubtedly grown fond of navigating the leasing process from their homes and taking self-guided tours when onsite, and the demand for digital solutions will surely continue even after COVID distancing is no longer a factor. Therefore, apartment owners and operators should think of these capabilities as long-term investments and always seek ways to optimize the digital leasing experience they provide. Along those lines, forward-thinking operators are employing solutions that allow them to embed credit functionality into their websites and mobile apps using modern, RESTful APIs like the Experian ConnectSM API. Not only does it enhance the information included in a lease application with credit report data, but it also allows prospective renters to easily apply for more than one property at once, enhancing their experience at the same time. Automated lease application form fill — By using information entered by a lease applicant (such as first name, last name, postal code and the last four digits of a Social Security number), this technology uses information from credit files to automatically fill other data fields in a lease application. This tool reduces the effort required by prospective renters to complete the application process, resulting in a better user experience, faster completions, greater accuracy and reduced application abandonment. Automated verification of income, assets, and employment — These solutions eliminate the need for associates to manually verify these components of a lease application. Manual verification is both time-consuming and prone to human error. In addition, automated tools eliminate the opportunity for applicants to supply falsified supporting documentation. The best part about verification is the variety of options available; leasing managers can pick and choose verification options that meet their needs. Renter Risk Score™ and custom-built scores and models applying RentBureau data — These options offer a score designed expressly to predict the likelihood that an applicant will pay rent. Renter risk score can be purchased with preset score logic, or for high-volume decisions, a model can be built calibrated for your specific leasing decisioning needs. A rental payment history report — The RentBureau Consumer Profile tool can provide detailed insight into a lease applicant's history of meeting their lease obligations, which is invaluable information during the lease application process. Having a tool to report rental payment histories to credit bureaus can be a powerful financial amenity. By reporting these payments, operators can help residents build credit histories and improve financial well-being. Such an amenity can attract and retain residents and provide them with a powerful incentive to pay rent on time and in full. In the end, tools that seek to manage risk and create improved experiences for prospective renters have a multitude of benefits. They create meaningful efficiencies for onsite staff by greatly reducing the time, resources and paperwork required to process applications and verify applicant information. This gives overextended associates more time to handle their many other responsibilities. Beyond just efficiency savings, these technologies and solutions also can help operators avoid the complications and loss of income that result from evictions. In fact, the National Association of Realtors estimates that average eviction costs $7,685. Managing risk and providing the best possible customer experience should always be top of mind for rental housing operators. And with the solutions outlined above, they can effectively accomplish those goals in 2023 and beyond.