The COVID-19 crisis has led to substantial changes in leasing activity, operations and renter behavior within the U.S. multifamily market, according to a new report from MRI Software.
The report, which compares data from more than one million active units in February-April 2020 and February-April 2019, illustrates reductions in demand and pricing and a rise in concessions, among other effects.
MRI’s report showed:
• A 4% increase in renewals and a 15% reduction in vacancy rates between March 15-April 30, 2020, compared to the same period in 2019. Furthermore, new rental applications decreased 29% from March 22 to April 19, 2020, before improving but remaining 11% below prior year levels at the end of April.
• Pricing for new 12-month leases decreased 2% in April 2020 compared to the previous month, while landlord concession volume increased by 53% year-over-year.
• A 3% increase in 12-month leases in April 2020 compared to April 2019.
• A 12% increase in electronic payment volume in April 2020 compared to February 2020.
• A 56% decrease in resident service requests in April 2020 compared to the prior rolling 12-month average.
MRI’s Market Insights team is also collaborating with the National Multifamily Housing Council on its Rent Payment Tracker. The most recent in the weekly series of reports showed a decrease of less than 2% in the rental payment rate during May 1-6, 2020 compared to the year-ago period.
“Our report supplements the Rent Payment Tracker to provide a clear picture of overall multifamily leasing activity, and the ways residents and landlords are responding to the COVID-19 crisis,” said MRI’s Brian Zrimsek. “We’re seeing greater numbers of residents staying in place compared to a year ago, although they’re still shopping around (remotely, for the most part).
“Landlords, meanwhile, are preparing for a softer market by offering more concessions and reducing rents,” he added. “Their focus is less on increasing revenue and more on maintaining occupancy levels.”
On a more qualitative basis, Zrimsek said, “we’ve been talking to many landlords and property managers who are displaying flexibility and a strong willingness to negotiate. This approach encompasses not only lease terms, but also payment terms.”
Zrimsek noted that the report’s findings on payment modes and property management met the expectations of the Insights Team. “Electronic payments are growing in popularity,” he said “Initially, residents chose this option for safety reasons, but they’re now seeing just how convenient it is. This trend should persist when the crisis is over.”
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