Multifamily Market Sees Decrease in Traffic and Applications Following Rise in Lease Pricing

Latest report from MRI Software shows slowdown in new lease signings in July

Solon, Ohio – August 10, 2022 – Recent multifamily leasing trends offer a textbook example of the effects of supply and demand, with traffic and applications dropping in July following the recent surge in pricing, according to the latest Market Insights report from the PropTech firm MRI Software. The resulting increase in vacancies has, in turn, eased upward pressure on pricing.

Highlights of the report, based on data from one million market-rate units since January of 2019, include:

• Traffic peaked in March of 2022 and diverged from the traditional pattern of increases during the summer season. Furthermore, volumes of traffic in July represented 80% of March traffic, 61% of July 2021 traffic, and 72% of July 2020 traffic.
• Applications also peaked in March. July applications reached only 76% of the March volumes and 82% of those from July 2021.
• Although the average price of a new 12-month lease declined between June and July (from $1,830 to $1,818/month), pricing is still well above the $1,744 average from January through May and represents a 20% increase from July 2021.
• Move-in volume for 2022 rose in July but remains low compared to that of July 2021.
• Renewal rates have improved despite high pricing. July rates rose 9% from July 2021 and 14% from July of 2020.

“Today’s multifamily market demonstrates what many of us learned in Econ 101 – that when prices rise demand drops,” says Brian Zrimsek, Industry Principal, MRI Software. “Tight occupancy led to rising prices, but now we’re seeing dampened demand, which, in turn, is leading to reductions in pricing. Other factors, such as inflation and low rates of unemployment, are also having an impact on market conditions. But at a fundamental level we’re looking at the basic laws of supply and demand.”

Zrimsek also notes the ongoing adoption of technology in applications, resident portals, and electronic payments, a trend that was accelerated by the pandemic. For instance, the use of electronic payments in July represented a rate nearly five times that of January 2019.

“As we exit the summer and head for the traditionally slower seasons, we expect prices to ease,” Zrimsek states. “Macroeconomic factors, largely inflation and employment, as well as back-to-office trends, will color renter behavior through the end of the year.”

About MRI Software
MRI Software is a leading provider of real estate software solutions that transform the way communities live, work and play. MRI’s open and connected, AI-first platform empowers owners, operators and occupiers in commercial and residential property organizations to innovate in rapidly changing markets. MRI has been a trailblazer in the PropTech industry for over five decades, serving more than two million users worldwide. Through innovative solutions and a rich partner ecosystem, MRI gives real estate companies the freedom to realize their vision of building thriving communities and stronger businesses. For more information, please visit mrisoftware.com.

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