Research Shows Mismatch Between Renters’ Searches and Reality
NAA’s Units Magazine has an interesting piece from Apartments.com about some research they’ve done on renters’ searches. Here’s an excerpt:
Searches on Apartments.com indicate renters are usually looking for a deal that may not exist, according to a new analysis of that search data. On average, the typical user searches for a maximum rent that is less than the actual average rent for a given area. In fact, there is roughly a 12 percent premium between average one-bedroom rents and the average maximum rent for which searchers on Apartments.com look. Searchers want the best price—and who can blame them?
Indeed, the more expensive an area is, the more searchers look for lower rental costs. Areas that have average rents between $2,000 and $2,500 have an average premium of real, over searched-for, rents of 22 percent. The premium for areas that average $1,000 to $1,500 is only 8 percent. No area that averages more than $2,500 in one-bedroom rents has renters searching for maximums above the market average.
Furthermore, the overshooting and undershooting of rents correlates to the percentage of income spent on rent. The more expensive an area as a share of income, the less likely a renter is to overshoot rents with their max search. Linear regression predicts that in areas where a renter pays about 25 percent of their income on rent, searchers will plug in a rent that is only 83 percent of the average. At about 11 percent of income spent on rent, they match their max search with the average (Note: These rent-to-income ratios purposely exclude any instance of affordable, discounted, or reimbursed housing).