National resident satisfaction continued to rise in the second quarter of 2018, with 77.3% of residents reporting they were satisfied overall with their renting experience. This increase continues the upward trend that began in the final quarter of 2017.
Continuing the national trend, renter satisfaction increased last quarter in all of the top 12 markets. The largest increase in satisfaction occurred in Denver again, with the share of satisfied residents increasing by 2.2 percentage points since this time last year. Dallas, Los Angeles, and New York were the other top markets that saw a year-over-year (YOY) increase in satisfaction of more than 1 percentage point.
National Renewal Intentions Steady; Market-Level Renewal Intentions More Volatile
After the remarkable jump in resident renewal intent at the beginning of the year, renewal intentions stayed steady this past quarter, with scores still strong at a four-year high. At the market level, renewal intent was more varied.
Scores changed substantially for Miami, New York, San Francisco, and Washington, D.C. Both Miami and New York saw increases in renewal intent above 5 percentage points, with the increase in San Francisco close behind, at 4.2 percentage points. Washington, D.C., conversely, saw a decrease of 8.1 percentage points since this time last year. This goes hand in hand with a large decrease in the value-for-amount-paid score for the District.
Similar to last quarter, Boston has the highest renewal intent of the 12 markets, but with only a 2.3 percentage point YOY increase. Chicago was the only other city besides Washington, D.C., to see a decrease in resident renewal intentions.
Residents' Value for Amount Paid Continues Upward Trend
Unlike the comparatively steady movement of renewal intentions and overall satisfaction, residents’ value for amount paid saw a steep increase nationally from last quarter, with a 1.5 percentage point increase, from 55.9% in the first quarter of 2018 to 57.4% this past quarter.
Across the top 12 markets, we see renewal intentions and value-for-amount-paid scores tracking together, with big YOY increases in Miami and New York of 5.1 and 5.0 percentage points, respectively. San Francisco saw the largest YOY increase in value for amount paid, with an increase of 6.9 percentage points.
As would be expected with its steep dive in renewal intentions, Washington, D.C., had a substantial YOY decrease in value for amount paid of 4.4 percentage points. The most likely explanation for these decreases, when most other markets are seeing marked increases in both rating areas, is a record number of Class A apartment buildings being absorbed into the D.C. metro.
According to a recent Bisnow article, 4,286 Class A units were absorbed by the D.C. market over the previous four quarters. This has led to an increase in rent prices across the market after a few quarters of declining rents. This, of course, has an effect on residents’ renewal intentions and value for amount paid. However, there's another part of the puzzle that explains how this absorption level has affected both rating areas.
When comparing all rating areas for residents in the Washington, D.C., area, the highest YOY improvements are all related to apartment and community features. The condition of the apartment has the highest score of these top improved rating areas.
Kitchen appliances saw the biggest YOY increase, 6.2 percentage points, followed by paint and wall treatments and parking availability, which both had increases around 5 percentage points. With record high absorption, it's obvious that resident demand is keeping up with the supply of units, but that huge number of Class A units that are now in the market appear to have resulted in residents being more particular about the overall quality of their apartments.
Rent has increased in D.C. by 1.2% from the first quarter of 2018, which is the first time YOY rent in the District has grown since the beginning of 2017. Both of these factors have likely driven down renewal intentions and value for amount paid.
Case Study: Maintenance Satisfaction’s 'Summer Slump' Not Caused by Broken Air-Conditioning Units
As might be expected, maintenance satisfaction scores are generally lower in the summer. This is true nationally and especially true for a particular case study done by Kingsley Associates.
With residents scoring maintenance teams after a work order is completed, one would expect satisfaction with maintenance to fall in the summer, since this is when air-conditioning systems often break down, which likely leads to unsatisfied residents. However, the data from the case study don't back up that theory.
In the case study, maintenance satisfaction scores were separated out by work-order type. The most common types of summer work orders were air-conditioning, lightbulb replacement, pest control, and broken garbage disposals. In the graph below, the bars show the count of work orders for each category, and the blue line shows the satisfaction with maintenance for those residents who placed work orders in each category. Interestingly, air-conditioning did not get the lowest maintenance satisfaction score; the lowest score was for pest control.
It's easy to tell whether a resident’s air-conditioning is fixed; it either cools the apartment or it doesn’t. Residents whose air-conditioning has been fixed are much more likely to be satisfied with maintenance teams, since their issue is definitively corrected. With pest control, however, it's more difficult to measure the effectiveness of the maintenance team's efforts.
There are also generally more bugs and other pests in the summer, and it can be very difficult to get rid of them. Pre-emptive, year-round pest management is therefore highly recommended to decrease the overall number of residents who have pests, which will keep the maintenance “summer slump” from occurring at your communities.
You can reach Kingsley Associates via Brianna Bocker at [email protected] or (770) 908-1220.
