Multifamily Leasing Bounces Back
New apartment lease signings “clawed back” to year-ago levels in late April after plunging nearly 50 percent in late March, reported RealPage, Richardson, Texas.
“We continue to monitor daily leasing activity for the U.S. apartment market, and the most recent numbers were a shocker: [late April] executed new lease volumes came in nearly on par with the 2019 totals for the same period,” said RealPage Deputy Chief Economist Jay Parsons.
But Parsons noted the improvement probably does not indicate a return to normal for apartment demand. “It’s tremendous news and confirms cautiously upbeat reports we’ve heard from many apartment operators. But is it sustainable? Probably not,” he said. “We are likely seeing pent-up demand unleashed after COVID-19 froze the market in the second half of March and into early April…We may see pent-up demand prop up the market a while, but it’s highly unlikely the apartment market–as resilient as its proven to be–can sustain 2019’s blistering pace through May and June given a bleak economic backdrop.”
Yardi Matrix, Santa Barbara, Calif., reported many markets saw decreasing apartment rents in April as the country moved into month two of stay-at-home orders.
Yardi’s National Multifamily Report said April rents declined $8 from March. “This marks the biggest one-month decline in our dataset, including during the Great Recession, and puts rents right back where they were in August 2019,” the report said.
Major gateway markets and tech hubs have already seen declining rents on a month-over-month basis, Yardi said. Tourist-based and oil heavy markets will likely be the hardest hit.
Though the COVID-19 pandemic disrupted the apartment rental process, the industry responded quickly with virtual or self-guided tours and online leasing, which have enabled operations to continue, Yardi said. “Many states have begun to relax their shelter-in-place rules, but returning to life outside of lockdown will require changes to normal daily life for some time, absent a pharmaceutical solution,” the report said.
RealPage also reported multifamily starts fell to 347,000 units on a seasonally adjusted annual basis in March, down 3.9 percent from March 2019 figures.