Landlords are switching to year-long leases, as renters find themselves in a favorable market as a result of the coronavirus pandemic.
Across the country, renters are staying put and renewing leases despite the enticement of a trend decreased prices in apartments. According to a report by MRI Software, apartment rental prices have fallen by five percent in May 2020, compared to the same time last year. Apartment rental pricing is also seven percent lower in May 2020 compared to February 2020.
Brian Zrimsek, industry principal at MRI Software, said that the lower percentages of rent applications was indicative of behavior during recessions, as people tend to stay put in times of uncertainty. But the increased use of credit cards to pay rent may signal a reaction to more landlords using electronic payments and waiving credit card fees, or it could signal a larger issue. Using credit cards to pay rent could be a riskier move if the reason for using credit was due to decreased cash flow.
However, other signs showed promise of a stabilizing rental market. Despite no new increase in rental applications and moves to a new apartment, traffic to view new apartments has rebounded to 101 percent of June 2019. Comparatively, renters are viewing new potential apartments and homes, but not applying as much as this time last year.
And the National Multifamily Housing Council's Rent Payment Tracker found that almost 81 percent of households in apartments paid their rent for June, only a .7 percent decrease from last year. Landlords have adjusted how they approach new tenants in the pandemic, with a 12 percent increase in twelve-month leases in May 2020, and 7.4 percent increase in twelve-month renewals since last year.
Zrimsek believes that the increase in year-long leases indicates a new strategy for landlords, who may be gearing up for a busy season in 2021 as the economy rebounds.
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Pearl Wu
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