In a recent survey commissioned by a software company in the property management space, some of San Francisco’s key issues stood out.
First, the tight supply in San Francisco, and all of the related economic consequences loomed large. And, related to that strain, a large percentage of millennials, who make up a hefty chunk of the city’s renters, admit to spending a huge percentage of their incomes to keep a roof over their heads.
AppFolio Property Management surveyed 1,500 U.S. renters in January 2016 to delve into what makes the rental transaction tick.
The survey results, meant to be used as advice for professional property managers who oversee anywhere between 10 and 5,000 units, also point to national trends in the multifamily rental segment as a whole.
AppFolio’s vice president of product Nat Kunes shared information about the multifamily market in San Francisco. What he shared was not surprising.
Even though the survey results are presented in overall demographic slices, AppFolio’s presence in all 50 states gives it information about larger market trends by metro area.
“San Francisco is highly price constrained,” Kunes said. “There is a lot of demand, and we’re seeing rental prices at all-time highs. Even though construction is going on at a fast pace, the supply is still not meeting the demand.”
Kunes said that a feature of AppFolio that works extremely well in tight markets like San Francisco is the ability to process applications and leases almost instantaneously. Where the rental process used to take several weeks, property managers can now present a potential renter with an iPad, which can use AppFolio to do everything from a credit check to signing a lease on the spot.
“Millennials will see this kind of transaction as the new normal,” Kunes said.
A market such as San Francisco is the kind of metro where there’s another new normal – where millennials and some other age groups are not blinking at spending 50 percent of their monthly income on rent.
AppFolio’s survey wanted to gauge what is top of mind for today’s renters.
Some of the key findings were:
- Online convenience can make or break a signed lease
- With more consumers renting versus buying, the rental market has become increasingly crowded.
- Nearly one-third (29 percent) say they found the rental listing for their current residence online
- Word of mouth still came in big, at 23 percent
- Renters prefer to complete apartment tasks from their phone, iPad or computer
- An impressive 46 percent of tenants prefer to pay their rent digitally—through an app, website or automatic withdrawal.
- Nearly a quarter of renters eliminate a property from their search if photos or videos of the property are unavailable
- Bad reviews (of the property itself or of the property manager) are also a deterrent, with 27 percent of respondents choosing this as the top reason for eliminating a property from their search
- Thirty-two percent of respondents said half or more of their monthly income goes toward rent.
