National renter satisfaction continued its steady upward climb in the final quarter of 2018, which marked a full year of increases in the metric. Before the fourth quarter of 2017, national resident satisfaction had held steady since 2015. This past quarter, however, 77.9% of residents reported “good” or “excellent” satisfaction with their renting experience, which is up only slightly from the third quarter of 2018, when 77.8% of residents were satisfied.
Resident satisfaction is also on the rise at the market level. Every market except Atlanta saw a year-over-year increase in satisfaction this past quarter. Dallas remains the market with the largest increase in satisfaction, with a 3.2 percentage point increase since this time in 2017, followed by Miami, with a 2.8 percentage point increase, and Denver, with a 1.7 percentage point increase. In Q3 2018, Atlanta saw a 0.1 percentage point decrease in satisfaction from the prior year. This past quarter, Atlanta saw a 0.5 percentage point decrease from the prior year. This is in direct contrast with Atlanta’s high year-over-year increase in resident satisfaction at the end of 2017. Boston, Chicago, and New York once again have the highest satisfaction levels of the top markets. They're also the only three cities with satisfaction scores above 80%.
Growth of Residents’ Value for Amount Paid Slows
Residents’ value for amount paid slowed its ascent slightly this past quarter after almost a year of steep increases. Despite the decrease in velocity, value for amount paid is still on the rise. The metric hit 59.8% in the last quarter of 2018, which was a half percentage point increase from the prior quarter. Earlier that year, increases of 1.5 to 2 percentage points quarterly were common from quarter to quarter. At the market level, we see increases in value for amount paid for all markets compared with last year.
Rent growth is sluggish nationwide and lags inflation and growth in hourly earnings, which has likely influenced the increases in value for amount paid this past quarter. Even Washington, D.C., which was seeing steep decreases in value for amount paid for the better part of 2018 compared with 2017, increased by 0.4 percentage points over the fourth quarter of 2017. Atlanta continues to score highest among the top markets, with a 67.0% satisfied score. The largest year-over-year increases were seen in Seattle, Dallas, and San Francisco, with increases of 8.2, 7.9, and 7.5 percentage points, respectively. Despite a national slowing of growth, both Dallas and San Francisco continue the high growth levels we saw in both markets in the third quarter of 2018.
Seattle experienced the largest year-over-year increase in value for amount paid, from 51.3% in the fourth quarter of 2017 to 59.5% this past quarter. Seattle also saw a year-over-year increase in resident renewal intentions of 1.6 percentage points. It's likely that the increased supply of apartments in Seattle as well as an overall decrease in rent—down 1.1% from the third to the fourth quarters of 2018—has caused both metrics to increase. Unlike what we saw in D.C. last summer, the new apartments being built in Seattle aren't being absorbed into the market and are instead driving rents down and value for amount paid up.
National Renewal Intentions Metric Continues Upward Trend
This past quarter there was another large jump in national resident renewal intentions, which rose from 54.9% to 55.6% of residents indicating they're likely to renew their current lease. At the market level, renewal intentions are also on the rise. Denver, San Francisco, and Miami all saw year-over-year renewal intentions increase at or above 5 percentage points. On the other hand, Washington, D.C., saw a decrease of 5.3 percentage points from the prior year. This is unsurprising after the past two quarters of decline for resident renewal intentions in the District.
Boston, yet again, has the highest renewal intentions across the markets. Boston has been at the top for renewal intentions since the third quarter of 2017 and above 60% since Q1 2017. Atlanta and New York follow, with 58.2% and 58.0% of residents likely to renew, respectively.
Resident renewal decision factors didn't shifted much this past quarter. For residents unlikely to renew, their biggest decision factor is rental rate, followed by community management. Similar to the third quarter of 2018, community management is the only renewal factor for those unlikely to renew that's seen a year-over-year increase in importance. It has risen by 2.3 percentage points, from 30.4% to 32.7% of residents selecting community management as a factor in their decision not to renew. For those likely to renew, their most important factor is location, also followed by community management. Community management is the second-most influential factor for those residents who are both likely and unlikely to renew, which is why it's important to have community teams that provide quality customer service all year-round. High-quality management teams directly affect residents’ likelihood of deciding to stay or leave.
Residents Unlikely to Renew Are Unhappy About Community Parking and Common Areas
While 55.6% of tenants nationally indicate they're likely to renew their current lease, 20.8% indicate they're unlikely to renew, and 23.6% are unsure of their renewal decision at the time of their renewal notice. For those residents who are likely or unlikely to renew, their survey comments for community strengths and community improvement areas were analyzed and categorized to determine the top strengths and improvements mentioned depending on renewal intent.
The following findings are separate from the renewal decision factors analysis above, as they're derived from open-ended resident comments instead of a single question prompting residents to select what influenced their renewal decision from a list of predetermined factors.
For residents who indicated they were likely to renew their lease, location was the topic mentioned most frequently as a community strength, with 45.8% of residents complimenting aspects of their community's location. The most common specific community strengths mentioned in relation to location include the community's neighborhood, the proximity to places residents like to go, and being close to a variety of retail stores. The second topic most cited as a community strength was intangibles, which includes specific mentions relating to privacy and noise, safety and security, and cleanliness and appearance. Residents who decided to stay at their communities come renewal time were most impressed with the location and the intangible aspects of the community.
On the other hand, for residents unlikely to renew, the topic mentioned most frequently that the community could improve upon was common areas, with 38.7% of residents criticizing aspects of their community's common spaces. The specific community improvements most commonly mentioned in relation to the common areas include the parking area, overall building, fitness center, and pool. The second most noted topic was intangibles, with specific mentions relating to cleanliness and appearance, safety and security, and privacy and noise. While these were positive factors mentioned by residents intending to renew, these aspects of a community were also mentioned as negative factors by residents who intend to live elsewhere. Residents who decide to leave their communities come renewal time may have been swayed to stay if common areas and the intangible aspects of their community were improved.
