Apartment Concessions Decline as New Leasing Stabilizes

After a seasonal lull in December, multifamily applications and move-in volumes are all up for a third consecutive month, according to MRI Software.

In March, traffic hit higher levels than it did in summer 2020. March’s traffic hit roughly 140% of March and February from that year. Call volumes associated with leasing also hit volumes not seen since last summer.

Online applications grew faster than overall application volumes, showing that online leasing is taking hold. Overall applications were more than 140% over February’s numbers. Online applications were nearly 200% of March 2020.

New leasing stabilized in March, remaining consistent with February. March’s move-ins were almost 140% of February’s total and nearly 120% of March 2020’s numbers. 

Renewal rates hit volumes last seen in September. Overall, March’s numbers were more than 120% of February’s total.

New lease pricing is consistent on a month-to-month basis and remains at prior-year levels. As pricing has improved, concessions are declining after two months of record highs, according to MRI.

While one- and two-bedrooms trailed studios and three bedrooms last summer, that trend has now reversed, according to MRI.

“Looking across the metrics we are tracking, it seems that the market is loosening up a bit. Increasing demand met with loosening supply,” according to MRI. “Although slight, the gap between move-in and move-out volumes is continuing to close.”

Despite the positive momentum in the apartment market, MRI says there are still challenges with rent payments. It cites the NMHC Rent Payment Tracker, showing rent payments declining 1.5% year-over-year and continuing a gradual decline over the past year.

Nearly 6% of residents across a population of 373,000 units have a balance due that is greater than one month’s rent. On average, they are behind 3.5 months, with roughly 60% of the population owing less than three months’ rent. MRI says that approximately 1.5% of the population is five or more months delinquent.

There will be billions of dollars released by the federal assistance for rental relief and slowly these funds are making their way into communities. However, it is unclear whether this money will be enough to pull all delinquent renters out of the whole. A Fitch Ratings analysis found that the lack of data on delinquent rent payments makes it difficult to ascertain whether the assistance provided will be enough to keep delinquencies in check.