Takeaways:
- The majority of renters are choosing to renew their leases.
- The percentage of renters who move out in order to buy will remain at or dip below current levels.
- Renters are renewing despite historic rent increases.
Real estate agents shouldn’t expect an increase in the number of renters moving out in order to buy a home in the next year.
According to MPF Research, 51.1 percent of renters whose leases were set to expire in August 2015 chose to sign another lease.
Leases renewed in August included, on average, a 5.4 percent increase in monthly rent — the largest rent increase for lease renewals in nearly 10 years.
“Renters are increasingly choosing to stay put and renew their leases in spite of rapidly rising rents and historically large levels of new supply, which logic would suggest would be driving down retention,” said Jay Parsons, director of analytics for MPF Research.
Top markets cited for renewal retention included:
- Milwaukee (65.3 percent)
- Northern New Jersey (64.3 percent)
- Miami (62.3 percent)
- Cleveland (59.5 percent)
- Philadelphia (59.5 percent)
Cleveland and Philadelphia have been two of the worst markets for home price appreciation in the past year.
Detroit (58.3 percent), New York (57.4 percent), Boston (56.7 percent), Hartford, Connecticut (56.4 percent), and San Francisco (56.4 percent) represent the other top-performing markets, in terms of renewal rates.
A number of markets with the lowest amount of renewal retention are also markets that are performing well, in terms of home price appreciation and sales activity.
They include:
- Denver (47.8 percent retention rate)
- Tampa (48 percent retention rate)
- Orlando (48.4 percent retention rate)
- Phoenix (48.9 percent retention rate)
- San Diego (48.9 percent retention rate)
- Las Vegas (49.1 percent retention rate)
The findings by MPF seem to back up recent research from Freddie Mac, which suggests that 55 percent of single-family and multifamily renters intend to rent for the next three years.
“Satisfied renters are more likely to continue renting, even as we are seeing rising rents in the market,” said David Brickman, executive vice president of Freddie Mac Multifamily.