Despite rents continuing to rise throughout much of 2018, renters are choosing to remain in the same apartment more than they ever have before, even if their rent goes up.
In fact, a new report from RealPage shows that apartment resident retention (renters electing to renew their lease after its initial term expires) hit an all-time high last year, with nearly 53% of renters choosing to renew their leases.
According to RealPage’s report, apartment resident retention jumped to 52.5% last year, meaning that in the country’s 50 largest markets, when renters’ initial leases came up from renewal, 52.5% of them chose to renew.
That’s an all-time high for resident retention rate, climbing from 51.7% in 2017, and besting the previous high, which was set in 2015.
The increase in renters staying in place is in spite of rents rising. According to RealPage’s report, the renters who chose to renew their leases did so at rents that were 4.5% higher on average than their initial rent.
So, people’s rent is going up by nearly 5%, but that’s not stopping them from staying in the same apartment.
The figures probably come as a bit of surprise to some in the market, especially considering apartment construction was at a nearly 30-year high last year, but RealPage notes that there a number of factors at work here.
“For example, loss of renters to purchase ran below the historical norm, especially when interest rates inched ahead of year-ago levels, making purchase less affordable,” RealPage noted in its report. “Perhaps even more important to the renter retention stats, very tight occupancy in the apartment sector’s Class B and C product niches limited product availability for many households who may have preferred to move.”
According to the report, metro-level resident retention in the 50 largest markets ranged from 46% to 62%.
Apartments in Milwaukee and Newark-Jersey City had the most repeat renters, each registering conversion of expiring leases into renewal leases for 61.9% of the households.
Resident retention was also above 60% in Providence, Rhode Island and Miami. The rest of the top ten markets where renters renewed their leases most often consisted of St. Louis, Philadelphia, Cleveland, New York, Minneapolis-St. Paul, and Pittsburgh.
Click on the image below to see more information about the top 10.
(Courtesy of RealPage)
Renter turnover was the highest in Salt Lake City and San Antonio, where just over 46% of renters chose to sign renewals. According to the report, other areas where resident retention ran well below the national level were San Diego, Charlotte and Phoenix.
