SOLON, Ohio, May 14, 2020 /PRNewswire/ -- The COVID-19 crisis has prompted substantial changes to leasing activity, operations, and renter behavior within the U.S. multifamily market, according to a new report fromMRI Software ("MRI"), a global leader in real estate software solutions.
The report, which compares data from more than one million active units (a subset of the total units managed by MRI clients) in February-April 2020 and February-April 2019, illuminates significant effects of the crisis, such as reductions in demand and pricing and a rise in concessions.
Key findings, which will be discussed in a webinar at 2 p.m. EDT today, include:
Less demand, less turnover: a 4% increase in renewals and a 15% reduction in vacancy rates between March 15-April 31, 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.
Lower prices: 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.
Longer leases: A 3% increase in 12-month leases in April 2020 compared to April 2019.
A shift to online payments: A 12% increase in electronic payment volume in April 2020 compared to February 2020.
Fewer service requests: 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 report showed a decrease of less than 2% in the rental payment rate during May 1-6, 2020 compared to May 1-6, 2019.
"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," says Brian Zrimsek, Industry Principal, MRI Software. "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. Their focus is less on increasing revenue and more on maintaining occupancy levels."
He adds: "On a more qualitative basis, 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 notes 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 remarks. "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.
"We also anticipated the significant decrease in service requests as properties focused on emergencies – again, with safety the primary concern," he continues. "We even added a feature to MRI's resident portal that sets expectations as to what qualifies as an emergency and that allows managers to gather important information about internal unit conditions."
The full report can be downloaded here. MRI's Market Insights Team intends to produce additional reports in the upcoming months. As Zrimsek comments: "Our objective is to support the real estate industry during the COVID-19 crisis. Data analysis plays a key role in helping all of us make the right decisions and cope with these unprecedented challenges."
About MRI Software MRI Software is a leading provider of innovative real estate software applications and hosted solutions. MRI's comprehensive and flexible technology platform coupled with an open and connected ecosystem meets the unique needs of real estate businesses – from property-level management and accounting to investment modelling and analytics for the global commercial and residential markets. A pioneer of the real estate software industry, MRI develops lasting client relationships based on nearly five decades of expertise and insight. Through leading solutions and a rich partner ecosystem, MRI gives organizations the freedom to transform the way communities live, work and play while elevating their business and gaining a competitive edge. For more information, please visit mrisoftware.com.