Low supply led to higher rental prices in June – report

With unit supply drying up and demand growing strong, rental pricing at market-rate properties climbed in June, according to a new report from MRI Software.

To gauge the impact of COVID-19 on affordable and public housing throughout the US, MRI compared data from over 1 million market-rate units and 1.5 million affordable and public housing units in February-June 2020 and February-June 2019.

The findings of the report showed that lease pricing in June rose from the 5% drop in May as supply of units tightened due to tenants choosing to stay put amid the coronavirus pandemic. The increase reflected the low turnover at multifamily units across asset classes compared to 2019, along with a growing demand for market-rate units. Traffic volume at market-rate properties jumped 18% year over year in June.

Tenants also continued to use their credit cards to pay rent, according to the report. The usage of card payments among residents of market-rate units was 78% higher in June than in February. MRI attributed the rise to one of two factors: credit card fee waivers from landlords or residents’ financial troubles.

Although some data points suggest the start of a recovery, MRI Industry Principal Brian Zrimsek raised a few concerns.

“Residents may be amassing credit card debt in order to pay rent. This is especially worrisome given the coming expiration of enhanced employment benefits, along with the rise in COVID-19 cases in major multifamily markets across the country, which could lead to renewed shutdowns and more unemployment. Governmental policies that protect individuals, as well as businesses, will help determine whether we encounter a perfect storm or a situation where landlords and tenants can keep themselves afloat throughout the pandemic. In the interim, analysis of data can inform decision-making.”