SAN FRANCISCO, CA - Higher income households are making up an increasing percentage of apartment renters, according to Kingsley Associates' latest resident survey data. For the four quarters ending on September 30 of this year, 76.5 percent of surveyed residents nationally are earning more than $40,000 annually and 41.2 percent are earning in excess of $75,000. For the same time period in 2010, 65.2 percent of residents reported annual household income of more than $40,000, while only 26.2 percent indicated earnings over $75,000. While this trend is observed across all apartment classes, it has been most pronounced at Class B communities.
"Owners and managers have certainly been adding to NOI through rental increases," comments John Falco, Principal, Kingsley Associates. "That has led to recruitment of higher-income residents, who apparently consider renting a better housing solution than they did a few years ago."
There is clear evidence that these new renters are less price-sensitive. Regardless of their likelihood of renewing their current leases, they were not as apt to cite "rental rate" as a decision factor. They also cited "home purchase" with lower frequency, suggesting that they are more comfortable—or more locked into—rental housing.
Less price sensitivity and a greater proclivity to rent in general are not, however, translating into increased loyalty to a particular apartment community. Only 57.5 percent of residents indicated they "definitely" or "probably" would renew their leases, a new three-year low. Indeed, with the notable exception of San Francisco, renewal intent is lower in every major market than it was a year ago. Residents may be content to rent, but they also appear to be pickier about things like location, amenities and management.
These findings and more are available in Kingsley Associates' Q3 2012 Multifamily Trends.
Kingsley Associates surveys approximately 1.5 million apartment units annually. The findings outlined above are based on survey responses received between October 1, 2011 and September 30, 2012.