COVID-19 Causing a Shift in the 2020 Rental Season
Eight months into the COVID-19 pandemic, its effects continue to ripple throughout the real estate industry. With total unemployment still north of 13 million, and stimulus checks and additional unemployment benefits no longer propping up the economy, many Americans are facing difficult decisions in regard to housing – and the rental market, specifically. More than just fiscal challenges, renters now have new hurdles in the leasing process: unit availability, market flexibility, health concerns, and more – all of which are combining to extend the rental season later into the year, well beyond its usual four-month period.
The typical renting “season” generally runs from May to August, which is largely based around convenience during the summer months and the standard school year for U.S. students. It’s easier to move during the summer and parents are reluctant to pull kids out of school in the middle of a year. These two factors are almost set-your-watch steady, so much so that entire operations are planned around these peak times. However, the COVID pandemic has thrown a proverbial wrench in most of the industry’s well-oiled plans.
In a recent survey by apartments.com, 48 percent of respondents said they delayed a move in 2020 due to pandemic-related issues. Of those respondents, 50 percent were still planning on moving within the next 6 months – a clear indicator that 2020’s leasing season could be pushed as far back as mid-fourth quarter.
At CARROLL, we saw the expected dip when the pandemic hit in February/March, but we also saw a climb toward normalized metrics as the traditional leasing season picked up. Now, in September, even though we’ve started to see the expected wind down in leasing velocity associated with the end of the season, we’re not seeing as large of a drop as we have in previous years. Trends in leasing velocity usually experience a 13 percent drop in the month of August. This year, however, we’ve only realized a 7.4 percent decrease from the previous month. Alternatively, our reports show a 38-percent year-over-year uptick in same-store prospects within the portfolio. Additionally, visits and same-store applications and conversions are all outpacing the previous year, with a strong surge in application activity.
An unforeseen byproduct of the pandemic is the effect it has had on market mobility. In the apartments.com survey, nearly 40 percent of respondents who had/have intentions to move, were searching in markets outside of their immediate area. This work-from-anywhere mentality has been made possible by the sudden shift to telecommuting brought on by the pandemic. As a result, people are no longer bound to localized proximities. Instead, people are moving out of high cost-of-living areas and settling (even if temporarily) in secondary and tertiary markets across the country. The exodus, while keeping intent high, is further prolonging the standard rental season as Americans – both employed and unemployed – plan their next moves in the midst of the pandemic.