Understanding Renters of Today and Tomorrow and the Stories We Can Tell

Michael Lim, Vice President of Data Science and Analytics, TransUnion

SEPTEMBER 18, 2019

Today’s agenda:

1

2

3

Who is renting in today’s rising rent climate?

What are the major types of renters and how different are they?

What does data reveal about the next generation of renters and how should you prepare for them?

Monthly rents have been steadily climbing across the rental industry

Source: Zillow Rental Listing data

Who is renting today?

$0.00

$0.40

$0.80

$1.20

$1.60

$2.00

Med

ian

Rent

List

Pric

e ($

Per

Sq.

Ft.)

+2.7% 5-Year CAGR

+4.4% 5-Year CAGR

Multi-Family

Single-Family

Leading to affordability issues across major U.S. markets

Source: Zillow

Who is renting today?

And less savings for renters

Source: Zillow

Who is renting today?

Who are these renters enduring higher rents?

34.7% 37.6%45.3%

53.0%60.7%

0%

10%

20%

30%

40%

50%

60%

70%

15.1% or less 15.1% to 22% 22% to 30.3% 30.3% to 44% 44% or more

Shar

e of

Ren

ters

Sav

ing

Not

hing

Share of Income Spent on Rent

Today’s renter households tend to be led by older Millennials and younger Gen Xers

22%

33% 30%

15%

02468

10121416

Under 30 30-44 45-64 65+

Num

ber o

f Ren

ter

Hous

ehol

ds (M

)

Head of Household AgeSource: NMHC tabulations of 2017 American Community Survey microdata. Updated 10/2018

Number of renter households (M) by head of household age

Who is renting today?

Renters tend to be split on whether they live with a partner

Source: Zillow

Who is renting today?

14%

37%

18%

30%

Living with a partner

MARITAL STATUS

Never married

Divorced/separated/ widowed

Married

And most haven’t attained a college degree

Source: Zillow

Who is renting today?

11%

33%

22%

12%

22%

High school graduate or

less

2-year/tech school degree

EDUCATION

Graduate degree4-year degree

Some college, no

degree

On average, they’re less creditworthy than those that own homes

Source: TransUnion Consumer Credit Database as of June 30, 2019

Who is renting today?

Median Age

% with Credit Score < 620

% with Auto Loans

Average Number of Cards

Median Credit Card Debt

% with Student Loans

HomeownersRenters

41

34%

21%

1

57

12%

41%

3

$2,984

12%

$1,748

14%

What are the major types of renters and how different are they?

Most rental households reside in Single Family Rentals (SFR) – not Multifamily (MF)

Share of rental market (%) by type of housing

Source: NMHC tabulations of 2017 American Community Survey microdata. Updated 10/2018

53%43%

Other 4%

SF vs. MF renters

Single-Family Rental (1-4 Unit)Multifamily (5+ Units)

There are numerous factors driving each renter’s choice to live in a given property type

Source: Freddie Mac Multifamily, Terner Center at University of California-Berkeley

SF vs. MF renters

Top 5 reasons for choosing to rent SFRs

70% 68% 66% 66% 63%

0%10%20%30%40%50%60%70%80%

Laundry Privacy Parking Pets Size and Yard

% o

f SFR

Res

pond

ents

SFR renters enjoy access to these features, since they’re more likely to be married and have kids

38% of SFR renters vs.

21% of MF renters

Source: Norada Real Estate Investments

SF vs. MF renters

Married Have Children

52% of SFR renters vs.

30% of MF renters

MF renters have their reasons too

Source: 2017 NMHC/Kingsley Renter Preferences Report

SF vs. MF renters

Top 5 reasons for choosing to rent a MF unit

23%

18%

13%9% 9%

0%

5%

10%

15%

20%

25%

30%

Not enough savedfor down payment

Convenience andFlexibility

Recently moved toarea

Renting betweenhomeownership

Avoidingmaintenance costs

% o

f MF

Resp

onde

nts

To examine differences in credit profiles, we took a look at SF and MF renters in the Chicago area

SF vs. MF renters

Chicago-Naperville-Elgin, IL

• Analyzed credit reports for tenant applications in the first half of 2019

• Isolated prospective tenants that applied for single-family and multifamily residences in the Chicago-Naperville-Elgin, IL area

Methodology

Data provided further evidence that housing type choice is based on the renter’s circumstance

Multifamily Renters Single-Family Renters

3037%16%

3656%4%

30%48%22

SF vs. MF renters

Median Age

$1,470$2,21933%

$23,81329%

Source: TransUnion Consumer Credit Database as of June 30, 2019

$28,104

* Does not include renters with no credit history

% Unscorable

% Auto Loans

Avg Credit Cards (CC)

Median CC Debt ($)

% Student Loans (SL)

Median SL Debt ($)

% Credit Score < 620

What does data reveal about the next generation of renters and how should you prepare for them?

Impactful events shaped the stories of each generation of renters

Next Generation of Renters

Silent Boomers Gen X Millennials Gen Z

1928-1945 1946-1964 1965-1979 1980-1994 1995-later

Today’s Renters Tomorrow’s Renters

9/11

WWII Kennedy Assassination

Vietnam War

Great Recession

Marriage Equality

9/11

Obama Election

Marriage Equality

9/11

Kennedy Assassination

9/11

Obama Election

Berlin Wall

Tech Revolution Tech Revolution

Obama Election

Rise of Populism

Source: Time Magazine, Marketing to Gen Z: The Rules for Reaching This Vast of Influencers

Years Born

Significant Events

If you want to know about how Gen Zers live, look no further than today’s dorm rooms

Next Generation of Renters

Source: MSN.com, Foodservice Equipment & Supplies

TodayYesterday

Gen Zers embrace sustainable products and are increasingly focused on companies that care

Next Generation of Renters

made an eco-friendly purchase in last year

Source: CGS 2019 U.S. Consumer Sustainability Survey, 2017 CONE Gen Z CSR Study

68% 72% 94%

willing to spend more on goods and services

produced in a sustainable fashion

believe companies should address urgent social and

environmental issues (compared to 87% of

millennials)

Gen Z is leading a mobile payment revolution and will force PMs to reshape how they take payments

70%Use mobile banking apps daily or weekly

33%Want to share their

payments on social media

Next Generation of Renters

Source: 2017 U.S. Mobile App Report, Accenture

39 Years between the 1st mass rollout of the magnetic stripe card and Apple Card launch

Gen Zers are more credit responsible than Millennials entering the market at the same age

Next Generation of Renters

52% % Credit Score < 620

20% Unscored

1 Average Number of Credit Cards

$757 Median Total Credit Card Debt

19% With Auto Loans

34% With Student Loans

$11,232 Median Student Loan Debt

Millennials in 20094.3 million born in 1987

Gen Z in 20194.7 million born in 1997

34% % Credit Score < 620

30% Unscored

1 Average Number of Credit Cards

$661 Median Total Credit Card Debt

23% With Auto Loans

36% With Student Loans

$15,075 Median Student Loan Debt

Source: TransUnion Consumer Credit Database as of June 30, 2019

Final wrap up and takeaways

• Millennials, younger Gen Xers and prospective Gen Z renters make up the most number of renters impacted by rising rents

• Each type of rental housing serves a very different type of renter – each with a different story

• Gen Zers about to enter the rental market will be very different than renters from previous generations, and property managers will need to quickly adapt to their preferences to succeed

Thank YouQuestions?Michael LimVice President, Data Science and AnalyticsTransUnionmlim@transunion.com