Multifamily Lease Pricing Down As Properties Go for Shorter-Time period Incentives

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Landlords Increase Apartment Concessions To Draw In Tenants

According to a monthly report on the impact of Covid-19 on apartment buildings by MRI Software, prices for new rental apartments fell 5% year-over-year in August, and contract renewals for less than 12 months increased.

The fall in prices for new leases in August continues a trend from July. Real estate uses shorter-term price incentives for leases of less than a year. This shows "good process management practices" to protect leases in the summer of 2021 and avoid expiration times in the late year, according to the MRI software report, which is based on data from the property management software users.

The historical unemployment and the far-reaching eviction moratoria due to the pandemic have created too much uncertainty in the multi-family market in the course of the upcoming budget season to "simply capture the actual values ​​of the previous year and push them forward with annual increases", the report says.

On the demand side, August traffic remained 13% above the previous year and the move-in volume exceeded the move-out volume for the second month in a row.

However, the collection volume still lags behind that of the previous year – a trend that started in March, with a decrease to 80% of the collection rate in March 2019 and a decrease to a nadir of around 66% last year in April. The move-in rate in August was only 83% in August 2019.

The move-out rate in August was also lower year on year and was almost 80% of the previous August rate. The renewal volume remains below 90% of the previous year.

The number of lease applications also remained at just 72% of the level of August 2019, but the number of cancellations was also 77% of the level of August before.

Tenants are increasingly choosing to use credit cards to pay rent. Electronic rental payments have increased 19% since January, mainly due to credit card payments. Overall, credit card payments accounted for 33% of electronic rental payments, compared to 21% in January. Direct bank transfers or ACH payments only increased 2% compared to a 92% increase in credit card payments this year.

"If residents are struggling with cash flow and turn to credit cards to pay rent, it is a negative sign, as opposed to using a card to earn points as a perk while landlords waive card fees," it says the report.

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