For the last couple of weeks, we've been sharing insights designed to help multifamily companies to steer through the challenging market conditions created by COVID-19. Last week we initiated a weekly roundtable discussion for our clients, a group that includes some of the most experienced pricing and revenue management practitioners in the industry.

In this blog, and in blogs that will follow on this site, we summarize insights that were shared during our discussion. The content is presented below in Q&A format, and all responses are anonymous. 

Rent Collections: NMHC announced on Apr 8 that rent collections were at 69% for March vs. 81% for February and 82% for the same month last year, so 81%-82% seems like the right benchmark. That's a drop of about 12 points - what's everybody else experiencing?

• Anecdotally we've heard numbers down more like 6-8 points as opposed to down 12, so kind of good news/bad news. Good news, almost 70% paid, bad news down 12 points is a little more than I've been hearing. I've been hearing 6-8. Note: that may be related to a somewhat A-class bias  

• We're faring slightly better. From an April rent collection standpoint, we're down around 9 points. Now when it comes to looking at how many people have paid versus how many people have typically paid, we're down about 5 percentage points. That implies that we have a fair amount of people that are on payment plans, so certainly we have eyes on kind of the 15th and the 27th of this month, which is when those payments come due 

• We are probably about 4 points off from our typical collections at this point of the month. Our much bigger concern is May rather than April. We thought that so many of the markets that we are in, and it was really varying market by market. We didn't really experience enough of the shutdown in March to preclude the masses from making their April rent payments; but we're much more concerned with what this number could look like for May, even with any potential government payouts 

• They are off 10.9 points through April 6th, so probably a day behind what NMHC was reporting, but actually close to NMHC's number then

• It's still early for us on the data we have, but we're about 6-8 points off

• Reporting 91% of April billed rents already being collected, so that's a spectacular number, way ahead of [NMHC's report]

• Using March as a benchmark, expected to be at just above 94, and we're just above 85, so that's off just about 9 points. About 300 payment plans over 10,000 units, so that's 3% on payment plans

• Folks I've been talking to have been telling me, mostly 2%-3% on payment plans so far. I certainly expect that number to grow over time.

In our recent webinar, we talked about how different this recession than any other. It doesn't matter, for example, how low an airline cuts its prices, people won't fly. We hypothesized the possibility of what we called a stage 1 and a stage 2 for this recession. In Stage 1, demand is essentially shut down, so pricing actions won't help; in fact, all they do is hurt your renewal discussions.  

Where and when people feel safe leaving their homes, we move into stage 2, which is more like the recession we experienced in 2008. In this stage, pricing is a real lever. We've been talking to a lot of people, and we're seeing that urban locations are hard-hit, with clear examples of stage 1 in our model, with leasing down 80, 90, even 100%. 

At the same time, many people have reported to me that comparing March to February, or year over year, March to the prior March, they're down more like 40%-50%. It's important to note that if you're still getting 50% volume, some of the stage 1 recommendations make no sense at all. That means you really have to measure and decide which stage you're in and then pick the right playbook.

So, I'm curious to hear what people are seeing. How many people are suffering through "stage 1" at this point? 

• We are seeing about a 40% decline in applications year-over-year in leases. Our cancellations are up about 28%; but similar to your comments, it seems to be bifurcated in the urban core, where leasing has dried up to a certain extent. In secondary markets, on the other hand, it is almost business as usual, and that surprises us a little bit, but we're having to adjust revenue management settings accordingly. Where it is stage 1 we can't really use price to necessarily generate demand, so we're using a lot of the suggestions that were made in the webinar. But in other markets where we can still operate business as usual, or with slight tweaks, we're taking advantage to eke out every penny that we can  

• Traffic is down 39% in our 20k unit portfolio with shows down 83% and leases down 56% - again, large metro is down the most

• We have a 30% drop in leases year-over-year, but a drastic drop as of 3/15

• We've seen some interesting data: first, the leases that we've secured, or the applications that we've secured over the last three weeks have been really "sticky." But those that came in prior to that period had not yet moved in, and many of those cancelled. We saw an immediate wave of cancellations, whether it was our moderate-income housing or class-A, so occupancy for us is trending down right now. We're doing what we can to secure more leases, and we're having some success, but there was a short-term lull in net applications and net leases for our team

• Surprisingly, our application velocity did not fall as much as we had expected. Lead and interest volumes were down 40%-45%, but our application volume was only down 20% or so, which implies that our conversion ratio actually got better. So, people who were shopping were real shoppers, not window shoppers. It wasn't as bad as we expected - we're not urban core. We're kind of in suburbs of secondary markets, but we have been pleasantly surprised.

I've had two people ask the same question: Are companies loosening their credit standards or changing their criteria to try to open up a little bit? 

• I think it's probably too early to do that. I think that's something we're going to have to look at in the coming months, but we are all still trying to understand its impact. This wouldn't have yet impacted anyone's credit, so we are in kind of a wait-and-see mode

• Four additional companies shared that they have not loosened credit standards yet

I think the consensus, and I would tend to agree, is that it is a secondary tool to use maybe a little later on when we have a better read of the situation.