CoreLogic® Releases Third Quarter 2012 Multifamily Applicant Risk
Index Report
IRVINE, Calif., Nov. 15, 2012 /PRNewswire/ -- CoreLogic (NYSE:
CLGX), a leading provider of information, analytics and
business services, today announced that CoreLogic
SafeRent®, the nation's leading suite of screening and
risk management services designed for the multifamily housing
industry, released its third quarter 2012 multifamily applicant
risk (MAR) index report including new renter trends. The third
quarter MAR Index value decreased two points from the second
quarter 2012 and increased two points from a year ago, indicating a
modest increase in national renter credit quality and applicant
pool quality.
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Published quarterly, the MAR index provides property owners and
managers with a benchmark of market based trends against which to
evaluate their applicant credit quality trends. It provides trends
of national and regional renter traffic credit quality scores
whereby a lower index value indicates an applicant pool with a
higher risk of not fulfilling lease obligations.
The third quarter 2012 MAR Index was equivalent for one- and
two-bedroom units at 106 (see Graph 1).
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Renter Trends (based on an analysis of 39,000 properties
representing nearly 6 million apartment homes)
- Rent Affordability Continues to Improve: Applicant
income increased in excess of 1 percent from the third quarter of
2011, while the share of household income used to pay rent
decreased in the third quarter by approximately 1.5 percent year
over year to approximately 22 percent of total household income.
The number of transactions with multiple applicants increased and
the number of transactions with only one applicant declined,
particularly in class A and B properties where the decline was in
excess of 3 percent. "Lower rent-to-income ratios suggest that
applicants can afford higher rents in many markets," said
Jay Harris, senior director of
Business Development for CoreLogic SafeRent. "The decreased number
of single applicants indicates that renters are continuing to share
the cost of rent with roommates, family and others in shared-living
situations."
- More Applicants Age 50+: Compared to a year ago,
applicants age 51 to 64 and 65+ comprised a slightly larger share
of all applicants across property class (A, B and C classes are
categorized by design and functionality, the year of construction
and the building's location) – ranging from 16 to 19 percent of
applicants. The share of younger applicants, ranging in age from 18
to 24, declined both from the second quarter and year over
year.
- Thin or No Credit File Applicants Increase: Applicants
with thin (3 or fewer trade lines on credit bureau file) or no
credit bureau files represented 29.2 percent of third-quarter
renter applicants—the highest share of renter applicants since
2007, but only slightly higher than the second quarter figure of
28.9 percent of applicants. "Individuals without conventional
credit histories are important component of the market and make up
an increasing share of all rental applicants," said Harris.
- Operators Are Declining Fewer Applicants: The proportion
of applicants declined by users of tenant scoring during the
third-quarter has dropped steadily, with the lowest number of
declined applicants in the third quarter of 2012. This is part of a
larger trend of fewer declined applications that has occurred since
2008. The multifamily operator determines the minimum score
required to qualify at each property, or the score at which an
applicant will be declined. This resident credit quality score
increased slightly for all property classes during the third
quarter, year on year. "The apartment industry continues to decline
fewer applicants and the renter credit quality of those applicants
has improved both in score and income," said Harris.
Regional Multifamily Applicant Risk Index Data
Regionally, the South reflected the lowest MAR Index value—103,
although this is a four point increase year over year. The
Northeast continues to maintain the highest MAR Index with a value
of 113 (see Table 1).
Table
1: Regional Multifamily Applicant Risk Index
Data
|
Region
|
Q3
2012
|
Q2
2012
|
Change
from
Q2 2012 to Q3
2012
|
Q3
2011
|
Change
from
Q3 2011 to Q3
2012
|
Midwest
|
103
|
106
|
-3
|
101
|
2
|
Northeast
|
113
|
116
|
-3
|
114
|
-1
|
South
|
103
|
105
|
-2
|
99
|
4
|
West
|
111
|
112
|
-1
|
108
|
3
|
U.S.
|
106
|
109
|
-3
|
104
|
2
|
The three Metropolitan Statistical Areas (MSA) with the greatest
decreases in the MAR Index year-over-year were Rochester, N.Y. (4-point decline);
Philadelphia-Camden-Wilmington, Pa.-N.J.- Del.- Md. (1-point
decline); and Boston-Cambridge-Quincy,
Mass – N.H. (1-point decline).The MSAs with the greatest
increases in the MAR Index year-over-year were Denver-Aurora-Broomfield,
Colo. (4-point increase); Washington-Arlington-Alexandria, D.C.- Va.- Md.-W. Va. (5-point
increase); and Austin-Round Rock, Tex. (5-point increase) (see
Table 2).
Table
2: Metropolitan Statistical Area & Multifamily Applicant Risk
Index Deltas
|
MSAs
With Leading Decreases
|
Q3
2012
|
Q3
2011
|
Change
from Q3 2011
to Q3
2012
|
Rochester,
N.Y.
|
99
|
103
|
-4
|
Philadelphia-Camden-Wilmington, Pa.-N.J.- Del. –
Md.
|
113
|
114
|
-1
|
Boston-Cambridge-Quincy, Mass – N.H.
|
114
|
115
|
-1
|
|
|
MSAs
With Leading Increases
|
Q3
2012
|
Q3
2011
|
Change
from Q3 2011
to Q3
2012
|
Denver-Aurora-Broomfield, Colo.
|
109
|
105
|
4
|
Washington-Arlington-Alexandria, D.C. – Va.-Md.-W.
Va.
|
115
|
110
|
5
|
Austin-Round Rock, Tex.
|
117
|
112
|
5
|
Understanding the Multifamily Applicant Risk Index (MAR
Index)
The MAR Index is published quarterly by CoreLogic
SafeRent. The Index is based exclusively on applicant traffic
credit quality scores from the CoreLogic SafeRent statistical lease
screening model (Registry ScorePLUS®). It provides
trends of national and regional traffic credit quality scores
whereby a lower index value indicates an applicant pool with a
higher risk of not fulfilling lease obligations. A MAR Index value
of 100 indicates that market conditions are equal to the national
mean for the index's base period of 2004. A MAR Index value greater
than 100 indicates market conditions with reduced average risk of
default relative to the index's base period mean. A value less than
100 indicates market conditions with increased average risk of
default relative to the index's base period mean. The MAR Index is
derived from the statistical screening model from CoreLogic
SafeRent, which is the multifamily industry's only screening model
that is both empirically derived and statistically validated. The
statistical screening model was developed from historical resident
lease performance data to specifically evaluate the potential risk
of a resident's future lease performance. The model generates
scores for each applicant indicating the relative risk of the
applicant not fulfilling lease obligations. A lower score indicates
a more risky applicant.
To receive the MAR Index data and renter trends for your
Metropolitan Statistical Area or if you have questions, contact
CoreLogic SafeRent at marketing@saferent.com.
About CoreLogic
CoreLogic (NYSE: CLGX) is a leading
residential property information, analytics and services provider
in the United States and
Australia. Our combined data from
public, contributory and proprietary sources spans over 700 million
records across 40 years including detailed property records,
consumer credit, tenancy, hazard risk and location information. The
markets CoreLogic serves include real estate and mortgage finance,
insurance, capital markets, transportation and government. We
deliver value to our clients through unique data, analytics, and
workflow technology, advisory and managed services. Our
clients rely on us to help identify and manage growth
opportunities, improve performance and mitigate risk. Headquartered
in Irvine, Calif., CoreLogic
operates in seven countries. For more information, please
visit www.corelogic.com.
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SCOREPLUS are trademarks of CoreLogic, Inc. and/or its
subsidiaries.
SOURCE CoreLogic