CHICAGO, IL - While rents continue to rise around the country, the rate of growth is slowly decreasing. According to CoStar, the real estate industry's leading provider of information, analytics and online marketplaces, the average cost of rent nationwide increased by 0.64 percent to $1,194 a month in the fourth quarter of 2014—down from a .89 percent increase the previous quarter. At the same time, demand for apartments remains strong despite a slight uptick in the vacancy rate to 4.7 percent in the fourth quarter of 2014 from 4.3 percent the previous quarter. CoStar predicts new apartment supply will also peak this year at more than 300,000 units. Apartments.com conducted its annual survey of more than 5,200 renters nationwide to determine how the healthy rental market would affect their moving plans this year. The survey reveals why renters are choosing to move or stay in their apartments, why more homeowners are turning to renting and the most popular apartment amenities.
Affordability, changes in marital and relationship status and wanting more space topped the list of reasons why respondents said they are moving this year. Three quarters of renters surveyed also indicated they are planning to spend either the same or less on rent despite current demand and increasing rents. When asked how much renters are currently spending on rent, more than 60 percent said less than $1,000 a month— just under the national average—and 35 percent are spending between $1,000 and $2,000.
"With new supply slated to hit this year, it is yet to be seen whether or not this will result in decreasing rents," said Brad Long, president of Apartments.com. "While construction is ramping up, demand is still strong, partly in response to many would-be homeowners turning to renting as a more viable financial option. In fact, the most popular reasons homeowners gave for why they are renting this year are because they lost their home to a foreclosure or divorce (up 4.3 percent from 2014), they can no longer afford their home, or they are downsizing."
Why are people moving in 2015? And, why aren't they?
Affordability, relationship changes, more space and family played a big role in renters' decisions to move this year. Other reasons renters gave for moving include being closer to school, needing accommodations for senior living or retirement, and selling property.
According to the survey, the top five reasons renters are moving in 2015 are:
1. More affordable apartment: 24.7 percent
2. Change in marital/relationship status (getting married/breaking up): 9.4 percent
3. Moving into a bigger apartment: 9.3 percent
4. Moving closer or farther away from family: 8.3 percent
5. Need a smaller apartment or want to live alone: 7.7 percent
Location played a strong role in keeping renters in place, as seven out of 10 renters said they are not moving this year because they like their apartment building and neighborhood.
When asked to check all that apply, the top five reasons renters said they are not moving in 2015:
1. I like my neighborhood: 36.9 percent
2. I can't afford to move: 34.9 percent
3. I like my apartment building: 34 percent
4. I already moved: 25.8 percent
5. I'm secure in my job: 13.5 percent
It should not come as too much of a surprise that bargains are biggest motivators when renters were asked to choose all that apply for getting them to leave their current apartment "immediately," regardless of their original moving plans.
1. Big discount (20 percent or more) on monthly rent for the full term of lease: 68.4 percent
2. Free rent for a month: 48.7 percent
3. More space for the same amount of money: 42.3 percent
Why are previous homeowners choosing to rent in 2015?
Underscoring a growing trend, previous homeowners are turning toward renting. Slightly more than 40 percent of total survey respondents say they have owned in the past. Interestingly, homeownership preferences are split right down the middle in 2015.
49 percent of former homeowners still wish they owned a home
51 percent of former homeowners prefer renting
56 percent of renters (who have never owned a home) prefer renting
44 percent of renters (who have never owned a home) would like to own a home right now
When survey respondents were asked to select all the reasons they prefer renting to owning, the most popular responses are ranked below.
1. No unexpected repairs – I'm not responsible for a leaky toilet, clogged sink, etc.: 69.7 percent
2. No/low maintenance – I don't have a driveway to shovel, grass to cut, etc.: 54.5 percent
3. Flexibility to move – I don't want to feel tied down, worry about selling home, etc.: 39.3 percent
4. Renting is more affordable for me than buying: 38.4 percent
5. No unexpected tax increases for the duration of the lease: 30.7 percent
6. I don't want the responsibility of a mortgage (or, I cannot get one): 29.9 percent
Urban areas are currently the main focus of developers targeting young renters willing to pay a premium to live in apartment communities decked out with lavish amenities. When asked which amenities renters are seeking during their apartment search, air conditioning and appliances topped the list.
Top five amenities renters are looking for during their apartment search:
1. Air conditioning
2. In-unit washer and dryer
5. Pet-friendly community