Photo: Robert Clark
Even though more new leases are being approved nationally each year, that doesn’t necessarily mean every generation is having the same experience getting approved.
In fact, Gen Xers are likely to have the most difficult time out of all generations getting their rental application approved, according to a report released today by the listing site RentCafe.
The approval rate of rentals has been steadily rising nationwide over the last several years, from 81.7 percent in 2014 to 83.2 percent as of the second quarter of this year. One possible explanation for the increase is a growing number of high-income renters in luxury developments, says RentCafe. Another possible reason is the eagerness of landlords to fill empty units.
At 77.5 percent, Gen Xers had the lowest approval rate of all generations in the second quarter of 2017.
“Gen-X-ers have felt the brunt of the housing crisis during their prime years of homeownership, and many have been left with ugly scars on their credit history, including foreclosures, and large amounts of debt,” says RentCafe.
Gen Z, or Centennials, had the highest (91.8 percent), followed by: the Silent Generation (91.2 percent), Baby Boomers (83.8 percent), and finally Millennials 82.8 percent).
Although Centennials are the youngest of the generations, they are likely getting such a high rate of approval due to their limited credit history which necessitates the use of a family-member as a cosigner. Also, unlike other generations, Centennials are starting with a “clean slate” on their credit reports.
“Federal Reserve Bank studies show that Gen-X-ers are the most debt-burdened generation in the U.S. Many Gen-X-ers were forced into renting after losing their homes in the housing crash, which has significantly damaged their credit and has left them with large amounts of debt,” Nadia Balint, an analyst at RentCafe and author of the report, tells BuzzBuzzNews.
Some 60 percent of all rental applicants were Millennials in the second quarter of 2017, while about 14 percent were Gen Xers, according to the RentCafe data. Centennials made up a little over 9 percent of all rental applicants.
While Millennials make up the largest percentage of rental applicants, that number has been on the decline over the last several years.
“It’s safe to assume that some of the older Millennials are becoming homebuyers, thus the number of rental applications from millennials is slightly but gradually shrinking,” Balint tells BuzzBuzzNews.
The top three cities with the highest approval rates were all on the West Coast: Seattle, WA (93.7 percent), Portland, OR (91.1 percent) and San Diego, CA (90.4 percent).
The top three cities are also big draws for Millennials.
“These cities are very active and high-priced rental markets with thousands of new apartments to fill every year, being in the top 20 cities in the country with most apartment units completed in the last 2 years,” says RentCafe.
Meantime, the cities with the lowest approval rates are generally the ones with the most limited supply: Scottsdale, AZ (70.8 percent), Detroit, MI (72.6 percent), and Arlington, TX (73.2 percent).
At 75.6 percent, Manhattan has one of the lowest approval ratings in the country. It is the most expensive rental markets and its limited supply of affordable housing has made competition in the marketplace fierce.
“With a lesser number of apartments to fill, landlords can be pickier,” says RentCafe.
Among the top reasons for being rejected, accounts in default or collection was the most common (32.9 percent). A low credit score resulted in about 8 percent of rejections, while limited or no credit history resulted in just over 2 percent of rejections.
The higher your FICO credit score, the more likely you are to be approved: a score over 750 (perfect credit) means there’s a 98 percent chance your application will be approved, compared to a credit score below 500 (poor credit) where there is only a 49 percent chance your application will be approved.
Click here to read the entire report.