Last week we shared some of the talking points from our weekly "downturn" roundtable discussion for our clients. We are convening this group, which includes some of the most experienced pricing and revenue management practitioners in the industry, every week so this week we summarize insights that were shared during our latest discussion.

The content below is presented below in Q&A format, and all responses are anonymous. If you have different insights, opinions, or questions that you would like us to address in the coming weeks, please leave them in the comments.

What are you currently seeing on renewals and NTV cancellations? 

• We have seen a slight increase in renewals, about 3 points year-over-year. Three points on a base that is somewhere between 50% to 60% range means 5% to 6% higher in terms of total number renewals over the base, which is fairly material

• We saw a surge of renewal % and NTV cancellation the second half of March, but things are slowing down

• In single-family, our renewals tend to be in the 65% to 70% range, regardless of how hard we push. Some process improvements about a year ago have led to us achieving 70% plus, and I expected that retention would surge because people were in shelter-in-place guidelines. However, we remain in that low 70% range, though we are seeing higher overall retention as a greater percentage of residents are going MTM. When all this started, we did react with a more conservative renewal strategy. Now that retention doesn't appear to have been affected one way or another, we may reconsider

• We're seeing similar results in our multifamily portfolio, looking at the last 30-60 days, we anticipated seeing a lot more lock-in. We have seen a slight increase, and by that I mean ever so slight. The situation is fluid: despite encouraging residents with really great deals to lock in for longer, people are often unwilling to take the chance right now. We find we have a bucket of residents who were planning to vacate anyway but are now asking for extensions, or short-term leases kind of in the 31-60 day range. 

• We have seen a slight increase in renewal retention, but we think it is somewhat misleading because many of those are signing shorter-term renewals. We're having them submit their notice at the same time if they truly are in that bucket that can't move.

• We're finding that people are not moving. They are staying, but are still hesitating on renewals. We are down 6.5% year over year on renewals, but going out into the future, we're down about 10%. I'm concerned about future months when people may be able to move, and there are no stay-in-place orders. If renewals are not committed in that timeframe, that's a risk, especially when competitors start cutting prices, and there are deals out there to be had

• We have seen a pickup in renewals, it's not the 70% or 80% on rates we were hoping for, but we are approaching a 60% renewal rate. That includes month-to-month, but our month-to-month isn't significantly higher than it was previously. What's interesting is that on the East Coast, we've seen retention approaching 75%. On the other hand, in northern California our retention has been slightly under 40%, so I'm not sure why that's happening. Southern California has been slightly higher in the low 50s, Seattle's been about 65%, Denver has been 51% 

How is leasing volume year-over-year? 

• There are definitely markets, particularly some of the urban cores, that are having the biggest problems, where little or no leasing is happening. That said, I've been surprised, pleasantly, that many other places I see down 40, down 25, maybe down 50. I do remember saying to someone once, it's amusing, I never thought I would use the words “only 40% down” in a sentence, but it seems highly market-driven and not nearly as uniform as I would have predicted before. 

• Our leasing volume is down between 20% to 40% or more depending on the market. Very few areas with a complete shut off, if any. We are averaging over two leases per property per week across 20 states for each of the past four weeks. We are surprised as well

• I'd say that we've been stubbornly resilient. Our trailing seven-day application volume topped out like March 5. Then about March 15, we started a pretty steady decline through the first few days of April, where we hit the bottom, but that bottom was only down 20% month-over-month. While lead volume was way down, constrained demand was only down about 20%. The biggest surprise was about ten days ago, when we started seeing web traffic pick up, and it filtered down the pipeline. We saw web traffic interest, showings, and then this week, we started seeing a resurgence of application volume. I can't explain it, I wish I could, but demand is strong this week

How are you accounting for payment plans vs delinquency? Are you dealing with that separately, e.g. using a different category of accounts receivable, or wrapping it into overall delinquency? 

• We've created a deferred rent code, so it does not show up until the due date, so that's definitely separating the payment plans from delinquency

• We have also created a deferred rent code as a resident who has agreed to make a payment plan and make the payments scheduled is not delinquent to our ownership

• We are evaluating our residents on payment plans separately from delinquency. Our PMS vendor has helped by building custom fields and creating reporting options. 

Note: that is the D2 Demand recommended approach. We know that different systems make it easier or harder to separate, but there is a big difference between someone who owes you rent and has not talked to you, and someone who owes you rent, talked to you, and you've agreed to a payment plan. So we would recommend separate accounts. 

We think PMS vendors are moving quickly and if you haven't already got advice on how to do some of this, please reach out to them. They already have some useful solutions and workarounds in place, and that does seem to be the consensus of how to deal with it.