The COVID-19 pandemic continued to negatively affect the U.S. multifamily market in May, resulting in lower lease pricing, expanded use of credit card payments, increasing traffic and a tendency among residents to stay put, according to MRI Software, a provider in real estate software solutions.
Pricing for new leases of eight to 14 months decreased by 5% in May 2020 compared to May 2019. Last month’s pricing is also 7% lower than that of February 2020. The use of credit cards for rent payments in May was 58% greater than that of February 2020.
“Some of these findings are expected in the face of uncertainty and recessionary thinking,” said Brian Zrimsek, Industry Principal, MRI Software. “And while we applaud the use of electronic payments, which bring convenience to renters and landlords alike, the use of credit cards could signal increased risks if residents are paying with cards because of restricted cash flows as opposed to a desire to accumulate reward points. Many landlords have waived the fees for credit card usage, so it’s difficult to know the motivations for this behavior change.”
The firm’s latest report compares data from more than one million market-rate units (a subset of the total units managed by MRI clients) in February through May 2020 and February through May 2019.
Other findings are more encouraging. Traffic year-to-date has recovered to 101% of the same period in 2019, yet renters are generally staying in place at a greater rate compared to 2019. New 12-month leases were up 12% in volume in May 2020 compared with May 2019, and 12-month renewals were 7.4% higher in volume year-over-year.
“Although many residents are choosing to stay where they are, the rise in traffic indicates that moves and applications could increase as the economy stabilizes,” Zrimsek said. “The increase in 12-month leases shows that landlords are thinking strategically, ensuring that lease terminations coincide with what will likely be a busy season in 2021.”
