For the past few weeks, we have been holding a weekly "downturn" roundtable discussion for our clients. This group includes some of the most experienced pricing and revenue management practitioners in the industry. Each week we have been summarizing insights shared during our latest discussion.

Below we share our observations of the first five weeks of this recession, with the Q&A that followed the presentation. 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 or contact us through the site.

Five weeks into the recession, we have been surprised to see that things are not as bad as most of us predicted. Specifically, collections have been much stronger than feared, and occupancy has largely held in most markets. Anecdotally we have heard about a curious, large pick up in leasing the past two weeks. 

We did some analysis on a set of mostly secondary markets and saw that leasing was off 54% YOY week of March 22nd; now, the week of April 12th was off only 13%. Note: this may be partially affected by differences in the timing of Easter. We also did this analysis on a mostly bi-coastal A-class set of data and saw the same pattern, albeit it much deep (down 80% week of March 22nd and "up to" down 40-50% the week of April 12th). 

The key takeaway is that we do not appear to be in a "Stage 1" situation that we described in our recent webinar. Of course, there is no guarantee that things won't turn again and get much worse. But until they do, the "stage 2" recommendations from that webinar should be followed rather than the stage 1 recommendations. These include:

• Communicate, communicate, communicate (with residents, prospects and associates)
• Determine your new pricing strategy with an eye towards how it affects your renewal pricing
• Reallocate, but don't reduce, your marketing spend
• Know your lead times so you can properly assess marketing results as leads turn (or don't turn) into leases
• Beef up email drip campaigns. Our random testing of a handful of communities continues to show it's rare that we receive more than 1-2 responses before leasing associates stop
• Use your CRM to assure follow up
• Use call centers to ensure all calls are answered

Q&A

What has everybody been doing with renewal and renewal negotiation strategies?

• We have tested three different renewals strategies, and there is no clear winner. Across the board, we see uncertainty leading to indecision. It's really not rate
• "Same for us." (x2)

At least three people have said that it's all about indecision rather than rate. Does that mean that people are rolling into month-to-month, or that you're doing something with short-term extensions? Have you let them roll month-to-month with no increase or less of a premium than you used to do? Or are they welcome to roll to month-to-month, but now they are paying that MTM premium?

• We're offering MTMs at zero premium
• We're offering no-cost lease extensions but managing the expiration curve, which has actually fixed some expiration curve issues
• We're keeping MTM premiums but allowing the renewing resident to break the lease with 60-day, or state law notice, whichever is less if they renew by a specific date
• We are keeping rates flat on renewals and offering up to 24-month leases
• We are holding renewal increases flat but leaving MTM premiums and rates in place. We're only waiving MTM premiums and holding rates flat if they can provide documentation of being affected by COVID-19
• We have lowered short-term and MTM premiums on new leases and renewals. Several state and local ordinances are restricting renewal increases for any terms. [Note: California, DC and Hawaii all have some form of restrictions. There may be some other places as well. So you may be forced to have either no or limited MTM premiums there.

Are companies on the call are tracking with NMHC delinquency data or are you seeing better results? 

• I can share that we don't see near the expected delinquency in total dollars. We're only 3% delinquency for current residents. That 3% is with a Denver portfolio. I have heard anecdotally from several that Denver payments have definitely better than the national average
• I've also heard from multiple sources (including the RealPage blog) that the A-class properties are doing substantially better. The C's have more of a collections issue, although still not typically worse than about 10% to 12%.
• [Midwest portfolio] we are 96% collected across a very mixed (affordable, market-rate) portfolio
• We are seeing bigger challenges in Florida and SoCal 

Has anybody been able to measure how the lead time to move-ins have changed, and how, if at all, has the cancel rate changed prior to move-in? 

• Anecdotally I have heard increased canceled move-ins. I have even heard that the leases that have happened post-COVID are not all coming to move-in as well. Some people may be leasing and then deciding they are uncomfortable actually moving. I haven't seen any hard numbers, so if anyone has any hard numbers on that, feel free to share that
• Our cancellations have gone from 4% to 7%. 
• We had this supposition that people were taking longer from a lead time perspective, and so we did some research on this. There doesn't seem to be much of a difference. We're still seeing about 30% of our people wanting to move within a two-week timeframe, 45% or so within about 30 days, and the only thing that we are seeing is that people want to move in, but they can't get their hands on a moving truck or something else like that. We are seeing some cancels or extended move-in times from that, but the initial interest doesn't appear to be much different than normal for us.