CoreLogic Releases Q4 2012 Renter Applicant Risk Index Report —Default Risk Among Renters Decreased Year Over Year—

IRVINE, Calif., Feb. 20, 2013 /PRNewswire/ -- CoreLogic® (NYSE: CLGX), a leading residential property information, analytics and services provider, today released its fourth quarter 2012 CoreLogic SafeRent® Renter Applicant Risk (RAR) Index Report, formerly known as the Multifamily Applicant Risk (MAR) Index Report. Published quarterly, the RAR Index Report provides market-based benchmarks for evaluating credit quality and risk of default for renters applying for apartment homes in multifamily housing units. The index also includes data from single-family rentals. Using a mean of 100, an index value above 100 indicates decreased risk, and a value below 100 indicates increased risk.

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According to the data, the risk of default among renters nationwide decreased year over year in the fourth quarter of 2012 with an index value of 103 compared to the fourth quarter of 2011 with an index value of 101. On a quarter-over-quarter basis, the risk of default increased in the fourth quarter 2012 compared to the third quarter of 2012 when the index value was 106. 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 (See Figure 1). 

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Renter Trends

  • Lower-priced rentals see more significant decreases in rent amounts:  Average rent amounts for Class A properties, defined as those with rents greater than $1100, increased 0.3 percent year over year.  At the same time, rent amounts for Class B properties, defined as those between $750 and $1100, remained unchanged from one year ago, while rent amounts for Class C properties, defined as less than $750, decreased 0.9 percent year over year.
  • Dual applicants increase: In the fourth quarter of 2012, the number of transactions with two applicants increased across property class.  On a year-over-year basis, dual-applicant transactions increased 3.9 percent for Class A properties, increased 2.8 percent for Class B properties and increased 0.3 percent for Class C properties.
  • Applicant income rises: Applicant income in the fourth quarter of 2012 increased an average of 1.7 percent among all property classes year over year and also increased over the previous quarter by .5 percent.
  • Fewer applicants declined: Compared to a year ago, property managers denied fewer applicants in the fourth quarter of 2012. Class A property managers denied 5 percent fewer applicants, Class B managers denied 1.3 percent fewer and Class C managers denied 0.6 percent fewer applicants.

Regional Renter Applicant Risk Index Data

Regionally, the Northeast and West had the highest RAR index value in the fourth quarter of 2012, both at 110, reflecting decreased default risk (see Figure 2). The Midwest had the lowest RAR index value at 98, reflecting increased risk, with a five-point decline from the previous quarter when the value was 103. The increased risk in the Midwest is reflective of increased risk seen in two Midwest Core Based Statistical Areas* (CBSAs) (see Figure 3).

Figure 2: Regional Renter Applicant Risk Index Data

Region

Q4 2012

Q3 2012

Change from Q3 2012 to Q4 2012

Q4 2011

Change from Q4 2011 to Q4 2012

Midwest

98

103

-5

97

1

Northeast

110

113

-3

110

0

South

100

103

-3

97

3

West

110

111

-1

107

3

U.S.

103

106

-3

101

2

The three CBSAs with the largest year-over-year increases in applicant risk were Chicago-Joliet-Naperville, Ill.-Ind.-Wis. (three-point value decline); Cleveland-Elyria-Mentor, Ohio (two-point value decline); and Dallas-Fort Worth-Arlington, Texas (one-point value decline). The CBSAs with the largest year-over-year declines in applicant risk were Denver-Aurora-Broomfield, Colo.; New York-Northern New Jersey-Long Island, N.Y.-N.J.-Pa.; and San Diego-Carlsbad-San Marcos, Calif., all with a four-point value increase (see Figure 3).

Figure 3: Core Based Statistical Area & Renter Applicant Risk Index Deltas

CBSAs With Largest Decreases

Q4 2012

Q4 2011

Change from Q4 2011 to Q4 2012

Chicago-Joliet-Naperville, Ill.-Ind.-Wis.

110

113

-3

Cleveland-Elyria-Mentor, Ohio

98

100

-2

Dallas-Fort Worth-Arlington, Texas

94

95

-1


CBSAs With Largest Increases

Q4 2012

Q4 2011

Change from Q4 2011 to Q4 2012

Denver-Aurora-Broomfield, Colo.

105

101

4

New York-Northern New Jersey-Long Island, N.Y.-N.J.-Pa.

124

120

4

San Diego-Carlsbad-San Marcos, Calif.

124

120

4


NOTE: CBSAs are selected from the Top 50 CBSAs based on population and applicant volume.

* The CBSAs referred to within the Renter Applicant Risk Index Report may differ from the CBSAs referenced in other CoreLogic data reports. CBSAs are defined by the Office of Management and Budget (OMB) and CoreLogic may provide data either for the overall CBSA or a Metropolitan Division of a CBSA, depending upon the report. The particular CBSA used is identified in the report. 

Methodology

The SafeRent Renter Applicant Risk (RAR) Index Report is published quarterly by CoreLogic. The RAR Index is calculated exclusively from applicant-traffic credit quality scores from the CoreLogic SafeRent statistical lease screening model, Registry ScorePLUS® and is based on an analysis of 39,000 properties representing nearly 6 million apartment homes and single-family rentals. The index provides a benchmark trend of national and regional traffic credit quality scores. The index value indicates the relative risk of an applicant pool fulfilling lease obligations. A risk index value of 100 indicates that market conditions are equal to the national mean for the Index's base period of 2004. A risk 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. Registry ScorePLUS 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.

To receive local or regional renter applicant risk index data or if you have questions, contact CoreLogic SafeRent at smallon@corelogic.com.

About CoreLogic

CoreLogic (NYSE: CLGX) is a leading property information, analytics and services provider in the United States and Australia. The company's combined data from public, contributory, and proprietary sources includes over 3.3 billion records spanning more than 40 years, providing detailed coverage of property, mortgages and other encumbrances, consumer credit, tenancy, location, hazard risk and related performance information. The markets CoreLogic serves include real estate and mortgage finance, insurance, capital markets, transportation and government. CoreLogic delivers value to clients through unique data, analytics, workflow technology, advisory and managed services. Clients rely on CoreLogic 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.

CORELOGIC, the CoreLogic logo, SAFERENT and REGISTRY SCOREPLUS are trademarks of CoreLogic, Inc. and/or its subsidiaries.

SOURCE CoreLogic



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