The COVID-19 pandemic changed the world in more ways than we could have ever imagined. The multifamily industry has been struck hard as many tenants experienced unfortunate circumstances, including unemployment, leading to deferred payments and delinquencies.
Although it will be a long road for recovery, the multifamily industry is poised to see some much-needed growth soon. The National Apartment Association (NAA) forecasts that while “overall market fundamentals are expected to be weak in 2021, there are numerous tailwinds for multifamily demand on the other side of the pandemic.”¹
According to the Pew Research Center, 26.6 million 18-29-year-olds live with their parents due to the strains of the pandemic and the growing gap between home prices and rent growth.² While remote working is a possibility for some, it is not the case for many. As restrictions imposed during the lockdown begin to lessen and employees begin to return to the office, pent-up demand for apartment-living is expected.
Many city-dwellers left apartment-living to stay in their parents’ homes, forcing landlords and property managers to lower rent and waive fees and penalties for delinquencies. However, CBRE forecasts pre-COVID vacancy levels and a 6% increase in net effective rents during 2021.³ While many properties offered unprecedented concessions to help fill vacancies, these will likely begin to fade as the demand increases.
Mortgage rates saw a sharp decrease in 2020, and homebuying seemed to spike. However, this surge will begin to slow down as life begins to return to normal and rates begin to rise. Renting will remain an attractive option for many who do not want to commit to a mortgage with so much uncertainty.
It’s no secret that the suburban market was booming throughout 2020 as many left the city for the suburbs. Rental units in suburban markets will continue to see rent price growth and lower vacancy levels as many have adjusted to this new way of living.
Although many Americans have begun receiving vaccines, potential renters may still be uneasy visiting apartments in-person. It will be crucial for properties to provide as much information as possible on internet listings and be open to giving virtual showings and 3D tours to attract tenants.
While recovery will be slow initially, there is a strong future ahead, with experts projecting a full market recovery in 2022. With the constantly changing landscape for property managers to navigate, digital marketing remains an important tool to get your properties in front of renters while they’re on the journey to find their next home. RentPath offers a portfolio of solutions to help get your listing maximum exposure to the most qualified tenants.
¹National Apartment Association – 2021 Apartment Housing Outlook
²Pew Research Center
³CBRE Multifamily 2021 Real Estate Market Outlook