COVID’s Impact On Multifamily in 2020
What’s Next For Multifamily?
There’s no doubt that the COVID pandemic has resulted in some pretty drastic changes in the multifamily business. While the multifamily real estate market has been known to be fairly resilient and stable, recent events have shown that not even multifamily is safe from the effects of the pandemic.
From the way property managers are leasing and giving property tours, handling maintenance needs, to how they are re-opening up their amenities - the age of COVID and social distancing has presented property managers with new kinds of challenges and obstacles. Luckily with mobile apartment apps and digital solutions like Mobile Doorman, it’s more convenient than ever to manage multifamily properties from a safe distance while staying on top of the needs of residents.
So 4 months into the pandemic - what is the multifamily industry going to look like in the second half of 2020?
Here are six ways that we think COVID will re-shape the industry in the second half of 2020:
- We expect to see a decrease in the volume of building permits
- With COVID-19 cases slowing down in some states and spiking up again in other regions, building and construction permits are likely to continue flattening or decreasing. According to data from the US Census Bureau, building permits fell by 20% from January to February of 2020 from 522,000 to 415,000 units. Developers who may have intended to start construction this year are continuing to face the tough decision to delay projects predicated on the current economy as well as actions taken by the government to slow down the virus.
- Average multifamily rents are expected to decline
- As many workers continue to experience the struggles of unemployment, being furloughed, or being asked to stay home - renters have felt the financial pinch; especially those who reside in more affordable class-C rental units and thus have less disposable income. While rent growth wasn’t severely impacted in the early stages of pandemic, it’s very likely that the number of renters deciding to pack up and move will continue to slow resulting from early shelter-in-place orders and eviction postponements just to name a few.
- Tenant turnover will continue to decline
- With Americans spending a lot more time at home and maintaining social distancing, this means that when it comes time to actually renew - residents are more likely to stay than back out of their lease. Moving can be a hassle - pandemic or not - and a costly expense for both the tenant and the property owner. With the uncertainty of the economy and COVID continuing to be top of mind, many residents are ultimately deciding to stay put rather than go through the stress of finding a new place to live.
- Vacancy rates are expected to decrease due to a lack of new construction
- Multifamily inventory is already struggling to keep up with demand and the pandemic has only exacerbated the current housing shortage crisis. With many developers putting their projects on hold, this means even fewer units available for renters.
- Lower interest rates equals a perfect time to buy
- The fact is this, housing is a basic human need and there will always be a demand for it. This combined with interest rates being at an all-time low, makes this a perfect time for investors to buy and maximize their return on investment.
- Virtual resident experiences will become the new norm
- Resident events, apartment tours, reservable spaces, package deliveries, and even maintenance requests are all going virtual and with social distancing, this digital transition has only accelerated. Property managers are searching and finding new, creative ways to maintain face-to-face communication with residents; and what better and safer way to do that than through video?
Interested in learning more about Mobile Doorman and what a mobile resident app can do for your property?
Reach out to our sales team at firstname.lastname@example.org or fill out our submission at the bottom of this page to get in touch with one of our experts!