Renter risk falls to end 2012

Fewer people are being denied during the rental application process.

The level of risk for renters who may default when applying for a spot in an apartment community subsided during the final three months of 2012, which may mean a more positive situation for commercial property managers in the future.

The total rental risk during the fourth quarter reached a mark of 103, which was two points improved from the same period in 2011, according to a report from CoreLogic. The figure was still slightly down from the previous quarter, which had a total value of 106. Any figure higher than 100 indicates that there is less of a risk in the market.

Regions paint consistent picture
Improvement was most notable in the West and Northeast region, as these areas were tied at a level of 110, the firm's Renter Applicant Risk report noted. The South registered a figure of 100 during the fourth quarter, while the Midwest was the only region with a figure lower than 100, as it fell to 98. Each region improved by some measure year-over-year, except for the Northeast. That region reported no change when comparing periods.

There was an improvement in the level of dual applicants during the final three months of the year. The fourth quarter had an increase of nearly 4 percent in this category compared to the same period in 2011, while the figure rose by approximately 3 percent for Class B facilities and 0.3 percent for those considered Class C.

Rental amounts fell for Class C properties, as the figure fell nearly 1 percent from the fourth quarter of 2011, the report explained. There was no change for Class B properties, while the most expensive properties witnessed a gain of nearly 4 percent in rents.

Applicants were rejected at a lower rate during 2012, as Class A properties had a 5 percent drop in denials, the report added. Class B properties experienced a declination rate of 1.3 percent, while the least expensive properties had only 0.6 percent denied.

Multifamily mortgage originations may jump
With an improving situation for renters, there may be further improvements to the market for property management companies. Total mortgage originations may jump to more than $250 billion this year, which is approximately 10 percent higher than in 2012, according to a report from the Mortgage Bankers Association. This trend may continue in the next few years, with close to $290 billion originations occurring by the end of 2015.

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