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Gauging Risk for Renters

According to the latest data from 2014 through 2018, the CoreLogic 2019 Renter Application Risk Report (RAR) noted that the credit quality of rental property applicants improved steadily nationwide. Over the past five years, the credit quality of prospective property renters in the U.S. has improved, and applicant incomes in high and middle rent properties stayed relatively the same year-over-year and low rent properties saw an increase in income. Between 2017 and 2018, the RAR index fell two points to a value of 83 points.

"For landlords nationwide, it appears the renter quality pool is increasing, which is a promising trend,” said CoreLogic Deputy Chief Economist Ralph McLaughlin. “However, it may be because of an increasingly unaffordable rental market, where middle rent applicants are increasingly applying for low rent properties."

Rent-to-income ratios is the highest in high-rent properties, up slightly year-over-year at 23.4% per lease. Meanwhile, the ratio for middle rent properties was 23.6%, and 21.6% for low rent properties,

Middle priced rentals saw the biggest increases in prices, increasing by 0.7% year-over-year to an average of $899 per month in 2018. High rent prices increased from $1,520 in 2017 to $1,524 in 2018, while low rent properties remained the same from 2018 to 2018 at $675.

By region, the West and Northeast reflect the lowest regional index values for 2018, with an index value of 73 in the West and a value of 85 in the Northeast.

The South and Midwest regions show higher index scores than the West and Northeast, and therefore lower credit quality among prospective renters. However, both the South and Midwest also show steady year-over-year decreases, with the South declining eight points since 2014 and the Midwest declining six points during the same period. Compared to the U.S. average index value of 83) the West remains below average, while the Northeast, South and Midwest stay above average.

About Author: Seth Welborn

Seth Welborn is a contributing writer for DS News. He is a Harding University graduate with a degree in English and a minor in writing, and has studied abroad in Athens, Greece. An East Texas native, he also works part-time as a photographer.
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