Over the past three years, national renter satisfaction has remained steady, with the rate fluctuating between 76.6% and 76.8%. However, for the first time since the end of 2014, renter satisfaction has surpassed that line, climbing to a high of 76.9% in Q4 2017. During the quarter, almost all of the top U.S. markets saw increases in renter satisfaction from 2016. The most significant increases over the past year occurred in Atlanta, Denver, and New York, with upticks of 1.6%, 1.8%, and 3.2%, respectively. Only one market, Dallas, experienced a significant decrease in renter satisfaction, with a 1.2% downturn compared with 2016.
Renter Renewal Intent Stabilizing Following Year of Rapid Renewal Growth
Renters intending to renew their apartment leases increased rapidly, by 2.6%, from Q2 2016 to Q2 2017. Since then, however, renter renewal intent has been on a slight decline, though it's wavered only 0.3% in the past six months, resulting in a current renter renewal intent rate of 53.7% nationwide. Among the top U.S. markets, the largest jumps in renter renewal intent over the past year can be seen in Boston and New York, with increases of 4.0% and 5.4%, respectively. As with renter satisfaction, the market with the greatest decline in renter renewal intent was Dallas, with a drop of 2.9%, bringing the renewal intent rate down to 49.1%.
Value for Amount Paid Steadies Nationwide, but Continues to Improve in New York
With both renter satisfaction and renewal intent showing little change this past quarter, it isn't surprising that the number of renters who are satisfied with the value they receive from their apartment compared with the price they pay increased by only 0.1% from Q3 2017, to 54.5%. Even though renter satisfaction with value for amount paid hasn't varied much over the past year, New York has seen a noteworthy, 5.9% boost in value for amount paid since the end of 2016.
Despite being known as an expensive rental market, New York has consistently achieved higher scores than most of the largest U.S. markets in renter satisfaction, renter renewal intent, and value for amount paid throughout the past year. In New York, 81.0% of renters are satisfied overall, 58.0% intend to renew their leases, and 56.7% are satisfied with the value for amount paid. For renters who indicated that they intend to renew their leases, location, community management, and security were the top factors influencing their decision. For renters who expressed satisfaction with value for amount paid, location, apartment features, and rental rate greatly influenced their positive value perception.
Recent changes in the New York market have shifted the power from apartment owners and managers to renters. As with many large metro areas, New York is expecting a record number of new properties, over 15,000 units, to come on line in 2018, which will bring the market's total to over 40,000 units delivered since 2016. The oversupply of units coupled with the slowing rate of job growth could almost double the vacancy rate, to 6.1%, in 2018, according to Reis. Another forecast, by Ten-X Commercial, predicts that vacancy rates could soar to as high as 11% in New York in the next year. After taking into account landlord concessions, rents are already falling in New York, creating a market that favors renters.
"Must-Have" Apartment Features and Community Amenities
As more technology-focused trends continue to appear in the multifamily space, it's important to remember basic apartment features and community amenities. The National Multifamily Housing Council (NMHC) and Kingsley Associates recently released the results of the third Renter Preferences Survey, which analyzed over 250,000 responses from renters around the country, asking renters which apartment features and community amenities they wouldn’t rent without. Basic features and amenities topped the list, while smart technology and sharing services fell to the bottom.
First and foremost, renters are looking for basic features when considering whether to rent an apartment. Air-conditioning, dishwashers, in-unit washers and dryers, and garbage disposals all top the list of must-haves for renters. At least 75% of renters say they wouldn't lease a unit if these features weren't available. Renters expect to pay $42.37 more per month for a unit with air-conditioning and $41.05 more per month for a unit with an in-unit washer and dryer. Smart locks, in-wall USB ports, smart lighting, and smart thermostats are at the bottom of the must-have apartment features list, with 17% or less of residents deeming the features necessary when renting a unit.
The most necessary community amenity, say renters, isn't one that's built or designed but rather reliable cell service: 78% of renters say they wouldn't rent at a community with unreliable cell service. Also at the top of the list of necessary community amenities are secure resident parking, swimming pools, nonsmoking buildings, and fitness centers. The least necessary amenities include bike and car sharing, bike maintenance areas, pet walking and daycare services, and bocce ball courts.
View the executive summary and full report here.
