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Real Estate

As more renters stay put, apartment retention breaks records, but revenue suffers

Many renters are holding off on moving through the pandemic

During the height of the pandemic in April, apartment retention in the U.S. hit a record high, as renters were unwilling or unable to relocate, according to RealPage.

Of those renters with leases expiring in April, 57.9% decided to stay put.

But higher retention rates didn’t mean rent revenues saw the same bounce, growing a slight 2.73% year over year through April, which RealPage said is the lowest rate since February 2011. This is due to the fact that landlords didn’t capitalize on renewal demand.

Compared to last year, U.S. apartment retention went up 3.61% year over year, and 2.4 points from the previous record set the month prior.

According to RealPage, more renters have been asking about month-to-month extensions or short-term renewals, as people are still staying in place to wait out the pandemic.

This dovetails with information released by Zumper at the beginning of April, which said that short-term inventory, defined as a minimum lease of fewer than four months or an option for month-to-month, grew about 20-25% year over year.

According to RealPage, there was a six-year low for renewal term lengths in April, as the average renewal term dropped nationally to 11.3 months.

It was lower-priced apartments that had the highest retention rates going into April.

Class C properties, properties that are generally older than 20 years, renewed 59.7% of respective expiring leases, while Class B properties, properties that are slightly older than Class A properties, retained 56.4%.

Class A came in lower at 50.6%, which still marked a record high for that group. Class A, or higher-end properties, have more turnover due to more competition from new supply at similar price points.

There were only six metros that had retention rates below 53%, including San Antonio; Phoenix; Los Angeles; Denver; Austin, Texas and San Diego.

Markets to notably sit on top of the leaderboard for retention rates topping 70% include St. Louis; Northern New Jersey; Philadelphia and Baltimore.

In terms of paying rent, about 80.2% of apartment households were still able to make a full or at least partial rent payment by May 6, according to The National Multifamily Housing Council’s latest Rent Payment Tracker.

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