The coronavirus, or COVID-19, has “brought a technical end to the 11-year bull market” in equity and bond markets, according to the Yardi Matrix National Multifamily Report for February 2020.
The virus’ spread has disrupted airline traffic, conference schedules, cultural events, and daily activities. Drastic quarantine and social distancing measures, especially in Italy and Wuhan, China, have taken effect to slow the disease’s spread and ease the burden on health care facilities. In addition, as of March 11, Donald Trump has instituted a 30-day ban on travel to the U.S. for all European citizens. As a result, the economy is likely already experiencing a “technical recession,” with the travel, restaurant, and tourist industries expected to take the hardest hit.
Multifamily market data for February 2020—as outlined in an earlier article on Yardi Matrix sister site RENTCafé—does not reflect the immediate impacts of COVID-19 on the U.S. multifamily sector and demonstrates strong employment and rent growth across major markets.
However, RENTCafé has charted a 25% decrease in its internet listing search traffic over just one week, from March 11 to March 17. The site’s affordability calculator and utility search traffic fell by almost 50% over the same period, and overall site traffic has fallen 22% since March 11.
According to Google Trends, searches for “apartments near me,” “apartments for rent,” and just “apartments” have fallen significantly over the past week, after ramping up to normal levels through January and February for the spring leasing season. At the same time, searches for terms like “home office setup,” “home workout,” and “home disinfection” are rising fast.
“COVID-19 has completely derailed the [spring selling season], forcing people into isolation and drastically shifting renters’ priorities,” says RENTCafé researcher Sanziana Bona. “… Being forced to stay inside, we must shift our priorities to what we can do from, for, and in our homes to work, eat, and stay safe.”
Yardi expects the COVID-19 pandemic to impact rental and economic data for at least the next three to six months, with the hardest-hit sectors—including leisure, hospitality, and trade—expected to take longer to recover. In the short term, owners and operators can expect some rent collection issues from tenants who are ill or have lost their jobs—and in these situations, Yardi advises operators to be flexible with tenants unable to pay.
However, Yardi says, the investment environment remains stable, with most portfolios well balanced. Institutions are well capitalized, and Treasury rates are at an all-time low. As the situation passes, the recovery is expected to take hold again, providing “an investment opportunity” for owners with cash on hand.
