When looking back on 2020 in a few decades, odds are it won’t be remembered as a banner year for the world. But that doesn’t mean that everything about the year should be permanently washed away.
Like almost everywhere else, it will be remembered as a trying year for multifamily. It will also be known as a year when the industry, by necessity, had to think outside the box and become extremely innovative. And while some of the newfound practices will be dated specifically to pandemic times, others are here to stay. At the very least, they laid the groundwork for the multifamily roadmap moving forward.
While the changing nature of community tours—from the types of tours offered to those demanded by prospects—is perhaps the most notable example, a handful of additional processes have been forever modified. That includes new industry practices regarding repayment agreements and evolving approaches to pricing.
While this certainly isn’t an exhaustive list of the 2020-fueled industry impacts, here’s a closer examination of these three key concepts:
The Tour Transformation
Self-guided tours and virtual tours certainly existed prior to 2020, but they were considered auxiliary options viewed more for their future value. That future arrived suddenly in the era of social distancing, and these types of tours quickly became the norm.
For context, Entrata launched its flexible self-guided tour option on July 15 of last year and completed nearly 184,000 tours in the first eight months of the platform, resulting in nearly 25,000 conversions. In the same timespan, more than 90,000 virtual tours were completed resulting in approximately 18,000 completed leases. As such, these tour platforms appear bound to be a regular part of the industry-wide leasing process moving forward.
The industry exhibited a flexible approach in 2020, often working with late-paying residents on repayment agreements. Although things are beginning to normalize in 2021, operators are continuing to be more elastic than before, according to Entrata’s recent Rental Housing Trends report. Although repayment agreements dropped 14.9% percent from January to February among the report’s property subset, the number of rental payment agreements created in February remained 420% higher than Feb. 2020.
Additionally, operators have continued to be more forgiving with late fees. The Properties waived, on average, 80% more late fees this February than in Feb. 2020.
The Evolution of Pricing
Pricing has always been a tricky concept. It’s the quest of trying to arrive at optimal rates based on myriad factors, including market trends, submarket nuances, demographics, psychographics and numerous other elements. Now, several additional variables have arrived. Trends differ within neighborhoods in some cases, as certain locales have been more affected by pandemic-related factors. The recovery rate from these effects has differed by locale, as well.
As such, more operators are outsourcing their pricing efforts to more intuitive models that analyze the variety of variables and feature a representative to help drive optimal rates. Pricing will always remain something of a fluid concept even in non-volatile markets, and an increasing number of operators are utilizing innovative platforms to help eliminate some of the guesswork.
Most of the world is eager to put 2020 in a time capsule with no intentions of reopening it—but a few silver linings occurred within the otherwise abrasive year. For the multifamily industry, that includes new practices and tech advances that will propel the industry moving forward.