Many recognized industry leaders we consult are consistent in their insights into market growth and predictions about how property owners/managers will address payment risk associated with consumer credit and conditional acceptances in the year ahead.  Here are a few shared insights:

1. Rent growth in major metropolitan cities will continue to inch upward based on supply and demand in most desired locales.  Net effect for residents with lower credit scores:  Unfortunate reality that rents and acceptance terms will stretch beyond their budgets without the help from an outside resource.
2. Sub-markets, particularly in states like Texas and Georgia, will see a bump up in rental activity as more and more residents search for less expensive quality living options.  Net effect for residents with lower credit scores:  Increased supply and competition for qualified residents will keep rents relatively flat year over year, but acceptance conditions will stay stringent in the absence of solutions to help residents qualify for a lease without having to break the bank to move in.
3. Consumer credit issues are here to stay. We see it with 20-somethings coming to market who are burdened with student debt. We see it with 30-somethings who either live within their means but hit an occasional road block or have lived beyond their means and amassed debt.  We also see it with 60-somethings who are coming from home ownership to renting but carry a lot of debt baggage from a lifetime of trying to keep afloat.  And, of course, we see issues with the millions of consumers who are still burdened with a lower score due to foreclosure or bankruptcy in the past five years.  Net effect for residents with lower credit scores:  Credit will continue to negatively impact lease acceptance terms, and subsequent offer conversions except at communities that look for measures beyond higher security deposits to reduce payment risk.
4. Reducing payment risk associated with lower credit scores will become a top-5 priority for REITs, in particular, as companies look to protect their investment in single family home rentals where the decentralized nature of their business will drive the need for proven payment solutions.  Net effect for residents with lower credit scores:  Mandatory, yet more financially attractive, payment plan options that assure on time delivery of funds for rent as an alternative to higher move in costs.
5. Property companies will continue to evaluate the effectiveness of conventional conditional acceptance terms and will increasingly turn to new risk reduction solutions as a means to increase lease conversions and stabilize resident populations for improved bottom line performance. Net effect for residents with lower credit scores:  Increased opportunity to say “yes” to a conditional lease offer with the security of knowing deliberate steps are in place to assure they are equipped to pay rent on time.

What are your predictions for 2014?  Will the conditional acceptance portion of your business grow? Will solutions to help presidents perform reliably gain traction?