Piñata, the largest rewards and credit building membership program for renters, released the results of a survey of first-time renters revealing how finances, amenities, working from home and pets are leading factors behind rental choices. The findings show that income, credit score and the current economic climate weigh heavily on renters’ decisions – but most surprisingly, despite fears and challenges, first-time renters are unwavering when it comes to accommodating pets, living alone and high-ticket amenities.
“First-time renters are entering the rental market at a turbulent time. The past year has seen record high rent prices, record low vacancies and wild shifts in the market,” said Lily Liu, CEO of Piñata. “The survey shows that many first-time renters are uneasy about their finances and how it impacts their ability to get a rental or continue to rent. At the same time, even first-time renters have high expectations when it comes to a home that meets their lifestyle choices such as working from home and owning pets, and property managers and landlords need to acknowledge these needs.”
One-Third of Income Reserved for Rent is a Dated Standard
Median US rent was $2,305 at the end of 2022, nearly 5% higher than the previous year, so it’s no surprise that more than half of renters were concerned about their ability to rent due to their income.
- Most first-renters (63%) say they budget 30% or less of their income for rent – an amount that’s quickly becoming unsustainable.
- Despite financial concerns, close to half (47%) said they do not live with a roommate or significant other.
- Of the 92% of renters that say they are worried the current economy will impact their ability to continue to rent, more than a third (38%) say they are “very” worried.
- When it comes to budgeting for their first rental, 68% factored security deposits into their budget, but less than half factored any other costs including rental insurance, pet fees, moving costs or amenities.
Good Credit is a Key Indicator of Getting the First Apartment
Despite being first-time renters with potentially little experience with financial independence, almost two thirds (62%) believe they have good credit; whereas 25% say that they have low or no credit, but they are aware of this and taking steps to improve their status. This spread also indicates the potential challenges for those with more limited credit to secure a place to rent or buy.
- 88% of respondents report rent payments to credit bureaus, with 50% saying their landlord does it for them.
- That said, the notion that only 38% of renters are actively reporting rent payments on their own indicates the opportunity for more to use services like Piñata to better position themselves for financial success in the future.
- Of first-time renters that earn less than $50,000, only 36% say they have good credit and 64% either have bad credit or are not aware of what their credit score is at all.
- Of those respondents, 24% were concerned about their ability to secure an apartment due to their credit, showing how the rent spikes may be disproportionately impacting certain demographics of new renters.
- What’s more, 23% of first-time renters typically pay their rent with a credit card.
Locations, Costs and Pets, Oh My!
While finances majorly impact renting decisions, it’s location that renters care about the most with 69% saying that it is their primary consideration followed by cost (62%). However, for renters earning less than $50,000, cost was cited as the most important factor.
- 80% of respondents said they would not even consider renting a place that did not allow pets, including 9% that did not currently have pets.
- Pet amenities, such as a dog park or dog washing station, are very important with 34% percent saying they are non-negotiable.
- Amenities came in fourth as a consideration, but renters are clear on what they want with 54% saying central heat and air-conditioning and 39% saying in-unit washer and dryers are non-negotiable.
- Pools are old news – once popular shared property amenities like gyms and pools were listed among the least important amenities for first time renters, with 40% and 44% respectively saying they did not care about those features. What’s more, 55+ renters cited the dishwasher as the least important amenity.
- For renters who regularly work at home, noise was the top consideration, with 38% saying they factored this in, and 31% focused on the availability of high-speed internet.
Why They Rent
While three to five years was the sweet spot of how long renters predicted they would rent, 19% said they plan on renting longer than five years or simply long-term with no set plans to buy. Renters that earn over $150,000 are highly considering a switch to buying, with 49% saying they were planning to buy within the next year or two, or as soon as possible.
- The primary motivator (30%) for those renting right now is that it’s a better fit with their current financial goals.
- For renters of all ages, from Gen Z to Boomers, the flexibility to move around and explore new places was also among the top motivators (24%).
- In a generation of remote work and high expectations for workplace perks, the flexibility to move easily was chosen as the top favorite reason to rent by 27% of renters.
- Meanwhile, for those earning $50,000 or less, the primary motivator is that they don’t have enough saved up to purchase a home (26%).
- On the other hand, 39% of renters say their least favorite thing about renting is the fear of rent hikes.
- For renters who make $125,000, 32% indicated that noisy neighbors are their least favorite thing about renting, with only 29% worried about potential rent hikes.
While some are nervous about the financial burdens of renting, many first-time renters are not only optimistic but see advantages of renting for their financial goals as well as the flexibility and sought-after amenities. First-time renters are demanding more from their renting experience whether it’s using this period as a financial stepping stone to build credit, saving to purchase a home, or a more permanent lifestyle choice that accommodates other goals such as flexibility and moving easily. This indicates a potentially bigger shift in mindset around renting and a need to make renting more rewarding and equitable for both short and long term renters.