The year 2020 has brought unexpected turmoil to the already evolving multifamily industry. In this post, we’ll discuss some trends, including what’s changed, what’s remained the same and what the future might hold.
One event forever changed the industry
When the first stay-at-home orders went into effect just as peak leasing season was kicking off this spring, prospective residents couldn’t change their need for a new place to live so they changed the way they found and viewed rentals.
See the unit without being there
Virtual tours — which were already gaining popularity became the go-to way to look for an apartment. Even though they couldn’t visit in person, prospects could still get an immersive experience of properties.
Taking virtual tours a step further
Prospective renters love self-guided tours them because they can view apartments at their own pace, and visit after business hours or on weekends. With self-guided tours, lease conversions showed an 86% increase compared to traditional leasing agent-led tours, according to NMHC OpTech research.1
Suburbs outperform urban properties
According to CBRE research suburban multifamily will outperform urban, maintaining lower vacancy and achieving higher rent growth.
CBRE Research’s top four markets to watch for multifamily performance in 2020 are Austin, Atlanta, Phoenix and Boston. Seven smaller metros had 4% or higher rent growth as of Q3 2019: Albuquerque, Birmingham, Colorado Springs, Greensboro, Memphis, Dayton and Tucson.2
Key migration statistics
As part of the TransUnion Rental Housing Financial Impact Study, we found some interesting trends in rental housing migration patterns:
- Year-to-date, the percentage of rental applications has decreased in all four geographic categories (dense-urban, urban, suburban, rural), with dense-urban (-5.6%) and urban (-8.5%) having the largest drops.
- Millennials are the only renter generation to show an increase, up 0.7%, in dense-urban properties when comparing applicant composition year over year. By comparison, all other generations showed an increase in suburban geographies.
The American dream: Home ownership?
Another interesting trend that has emerged is that more millennials could be opting to rent rather than own. Surveys show that 32% of rental households don’t believe the American dream includes homeownership, 26% of people who do own a home wish they were renting instead, and 20% say they never plan on buying a home in their lifetime. 4
Fraud isn’t going away
Unfortunately fraud continues to plague the industry. The TransUnion 2020 Fraud in the Rental Industry Survey shows that two-thirds of property managers say they have been victimized by fraudulent rental applications. In addition, this applicant fraud has increased 9% month over month since COVID-19 hit the nation.
Attempting to prevent fraud is also very time-consuming. One in five of the property managers report it taking more than 10 hours to vet an application, and 58% say it’s a task that is somewhat to extremely challenging. The typical property manager reports 15% of online rental applications exhibit fraudulent information with another 10% of fraudulent applications slipping through the cracks.4
Tracking the trends
Overall, although it’s taken a hit, the multifamily industry has weathered the pandemic better than other industries. But the industry is always evolving, and owners/operators must keep their eyes to the future that could impact net operating income.
To track the trends, TransUnion is conducting monthly surveys to keep you informed.
See the results of our Rental Housing Financial Impact Study here.
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For more information on how TransUnion can help you drive profits throughout the entire resident journey, visit us online at https://www.transunion.com/solution/resident-quality-management.
1 National Multifamily Housing Council
2 CBRE 2020 US Real Estate Market Outlook
3 Multifamily Executive Survey
4 Reality Mogul