DALLAS—The US apartment market performance metrics for Aprilshow a mixed bag of results, says a report by RealPage. Surveyresults for 9.1 million multifamily units across the country showApril's occupancy rate at an average of 95.4%, drifting down a mild20 basis points from the March result to a level that matches theperformance from April 2019.

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The more telling comparison point may be to go all the way backto the occupancy figure from mid-2008 prior to the Great Recession.Viewed from that perspective, April's occupancy of 95.4% isencouraging, coming in 160 basis points over the mid-2008 reading.That occupancy premium provides some cushion for the decline thatis to come. Furthermore, it may help landlords limit the magnitudeof near-term rent cuts, at least to some degree, says thereport.

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With so many households staying at home, strong residentretention for expiring leases is helping boost occupancy. About 53%of renters chose to stay in place at lease expiration in 2019 andearly 2020, and that figure inched higher in recent weeks.Furthermore, some who had informed apartment operators ofintentions to leave later rescinded those move-out notices, eithersigning short-term leases until the health crisis becomes moremanageable or leasing on a month-to-month basis.

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Because new product delivery was delayed, the limitedmultifamily completions in April also helped boost the overalloccupancy rate.

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But while it's good to have full units, it's obviously better tohave those units occupied by rent-payers. The good news is,according to the National Multifamily Housing Council's RentPayment Tracker, 91.5% of the residents of properties underprofessional management paid April rent. That's about 4 percentagepoints under the year-ago level, but it's a much better result thanmany anticipated given the size of recent job cuts.

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"Among the big markets in Texas, Dallas/Fort Worth is faringbest," Greg Willett, RealPage's chief economist, tells GlobeSt.com."Occupancy comes in between 94% and 95% in each metro. While that'sa little under the national norm, lots of product moving throughlease-up almost always holds local occupancy in Texas markets belowthe US standard. Modest pricing momentum remains intact acrossAustin and DFW. Asking effective rents are up 1.5% to 2% annually.Struggles are more pronounced in Houston and San Antonio,reflecting that the local economies are heavy on industries takinga hit right now. Houston's energy sector is downsizing once againand a big hospitality sector is hurting San Antonio's performance.Occupancy in both metros has slipped to the 93% mark. There areslight cuts year-over-year in asking effective rents. With morethan a third of the product offering a period of free rent, use ofpricing concessions is more common in Houston and San Antonio thanin any other markets across the country. Giveaways in propertiesmoving through initial lease-up are big, at least a month of freerent and sometimes two months."

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However, April's payment results didn't extend across everymarket. Other key potential trouble spots include New Orleans, NewYork, Los Angeles and Las Vegas.

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There are annual cuts in asking effective rents in 11 metros.The biggest loss, a change of -1.6%, is in San Francisco. Askingeffective prices are down 0.1% to 0.9% across Orlando, Los Angeles,San Jose, Denver, Oakland, Houston, San Antonio, Atlanta, FortLauderdale and Providence, RI.

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While those shifts in asking effective rents are informative,the more telling story is what's happening in the rents achieved inexecuted leases. There's a meaningful disconnect in the twofigures, as the drop in pricing power for executed leases goesdeeper than the decline in asking effective rents, according to thereport.

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In contrast to the 1% annual increase registering for askingeffective rents, executed new-resident lease prices were down 4.5%from year-earlier levels as of the last week in April.

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April's apartment performance metrics showing continued tightoccupancy is encouraging and rent payment levels from the existingresident base exceed the expectations that many had.

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Still, the overall message for multifamily is the sector islikely in for a rough prime leasing season. While leasing velocitylate in the month showed some momentum from the dismal resultsrecorded in late March and early April, it's probably wise toexpect that near-term absorption could come in at a level barelymore than half of last year's volume.

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Furthermore, while the declines in asking effective rents aremodest, most leases are being signed at levels below what thosequoted rents would suggest. Performance hasn't gone off the edge ofthe cliff, but it is notably weakened for now, says RealPage.

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Lisa Brown

Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.