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More renters now shopping for homes, says new report.

In a sign that consumers may be shifting preferences from renting to homeownership, a new TransUnion analysis found that 55 percent of those who shopped for a mortgage in Q1 2017 were non-homeowners--most of whom are renters.

This is a significant rise from Q1 2016(50 percent) and Q1 2015 (45 percent). The results of the study were featured at the National Apartment Association Education Conference & Exposition.

"The rental market has seen sustained growth for the last several years, but occupancy rates have flattened from their peak in the second quarter of 2016," said Mike Doherty, senior vice president of Transition's rental screening solutions group.

"This new uptick in mortgage shopping could be a precursor to further declines in occupancy, which would impact rent growth--and ultimately, revenue--for multifamily property owners. In anticipation of this potential shift, owners and property managers should be offering the right amenities and programs designed to attract renters."

TransUnion's report found that millennials' interest in homeownership is growing steadily over time. In 2017, three in 10(29 percent) non-homeowners who shopped for mortgages were millennials, up slightly from 28 percent in 2016 and 27 percent in 2015.

In addition, 34 million renters between ages 25 and 44--typically a prime age range for homeownership --were credit eligible for a mortgage. Just 34 percent of renters under 44 years old had a VantageScore[R] 3.0 credit score below 580, a common benchmark used by some institutions to determine whether a borrower qualifies for a low down payment loan.

"Property management companies should consider new services such as rental payment reporting to credit bureaus to entice renters into their multifamily properties." added Doherty.

"In many cases, renters are more likely to choose a unit if their property manager reports their rental payments. Our survey data show that most renters prioritize their rental payments and want their payment reported."

A prior TransUnion survey of renters found that more than half (51 percent) would be more likely to choose a property if they knew their landlord would report their rental payments to credit bureaus. Nearly eight in ten (79 percent) survey respondents said they prioritize rent above all other monthly bills.

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Comment:More renters now shopping for homes, says new report.(NEWS)
Publication:Real Estate Weekly
Date:Jun 28, 2017
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