Risk of Default for Renters Down from Year Ago, Up Quarterly

Renters across the country are less likely to default compared to a year ago, but the risk of not fulfilling lease obligations has increased on a quarterly basis, according to ""CoreLogic's SafeRent Renter Applicant Risk (RAR) index report"":http://www.corelogic.com/about-us/researchtrends/renter-applicant-risk-index.aspx.

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With an index value above 100 indicating less risk, CoreLogic's national index stood at 103 in the Q4 2012, up from 101 in Q4 2011, but down from 106 in Q3 2012.

""The increased risk from the third quarter to the fourth quarter of 2012 reflects a riskier applicant pool that is typical in seasonally slower periods of applicant traffic,"" the report explained.

On a regional basis, the Northeast and the West registered the highest index value, with both at 110 in the fourth quarter. Compared to Q3, however, the Northeast saw a decrease from an index value of 113, while the West saw a drop from 111.

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With an index value of 98, the Midwest had the highest risk of renter default after its index value fell 5 points from Q3. The South had an index value of 100, representing a decrease of 3 points from Q3.

Among metro areas, Chicago, Cleveland, and Dallas experienced the biggest yearly increase in renter risk. Chicago's index is now at 110 (down from 3 points), while Cleveland and Dallas are at 98 (down 2 points) and 94 (down 1 point), respectively.

The metros where risk declined the most were Denver, New York, and San Diego. In all three metros, the index's value increased by 4 points, with New York and San Diego at 124.

CoreLogic also found lower-priced rentals are actually getting cheaper, while higher-priced rentals are are getting slightly more expensive.

Class A properties, or those with rents greater than $1,100, saw rent amounts rise 0.3 percent over a one-year period. Meanwhile, Class C properties (less than $750) saw rent prices decline 0.9 percent year-over-year. Class B properties ($750-$1,100) were unchanged.

In addition, the fourth quarter saw an increase in applicant income, which rose 1.7 percent on a yearly basis for all property classes.

Transactions with two applicants also increased, rising 3.9 percent for Class A properties, 2.8 percent for Class B, and 0.3 percent for Class C.

The index represents nearly 6 million apartments and single-family rentals and assesses risk based on credit quality.