Covid-19 Weekly Economic & Industry Update - July 15, 2020 - National Apartment Association
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July 15, 2020
Covid-19 Weekly
Economic & Industry
UpdateEconomic Impacts
Weekly Initial Claims for Unemployment
(Not Seasonally Adjusted)
7,000,000 • 2.3 to 2.4 million Americans
continued to file for
6,000,000
unemployment each week
5,000,000 for the past six weeks.
Number of Claims
4,000,000 • Claims for the Pandemic
Unemployment Assistance
3,000,000
Program, which covers
2,000,000 workers not eligible for
1,000,000
traditional UI benefits, has
been trending upwards for
0 the past month.
3/21/2020 4/21/2020 5/21/2020 6/21/2020
Unemployment Insurance Pandemic Unemployment Assistance
Source: U.S. Department of Labor, excludes Puerto Rico and U.S. Virgin Islands.Economic Impacts
Unemployment Measures
Official Unemployment Rate U6 Unemployment Rate • The U6 unemployment rate
25.0 1
is an alternative measure of
0.9
unemployment which
20.0 0.8 includes part-time workers
0.7 who want full-time work and
June 2020
15.0 0.6 those not looking for work.
0.5 • The U6 rate hit a series high
10.0 0.4 in April of 22.8% and
0.3 remained above Great
5.0 0.2
Recession levels in June.
0.1
• The gap between the two
measures has doubled since
0.0 0
the Covid-19 crisis began.
Source: U.S. Bureau of Labor StatisticsEconomic Impacts
NFIB Small Business Optimism Index • The Small Business
115.00 1
Optimism Index increased
110.00
0.9 6.2 points in June to 100.6,
0.8 with eight of ten index
105.00 0.7 components improving.
June 2020
100.00
0.6 • The two components
0.5 measuring sales and
95.00
0.4
earnings over the past 3
months declined.
90.00 0.3
• Despite that, small business
0.2
85.00 owners remained optimistic
0.1
and expect to see improved
80.00 0
business conditions over the
next six months.
Source: National Federation of Independent Businesses; Moody’s AnalyticsEconomic Impacts
Consumer Price Index
1.5 1
• Disinflationary pressures
Seasonally Adjusted Percent Change, Monthly
0.9
1.0 were assuaged in June as
June 2020
0.8 the Consumer Price Index
0.5 0.7 rose for the first time in 3
0.6 months, up 0.6%.
0.0
0.5 • Energy prices rebounded by
-0.5
0.4 5.1%, driven by increases in
0.3
gasoline and fuel oil.
-1.0
0.2
• Food prices increased once
-1.5 again, but at more moderate
0.1
rates than prior months.
-2.0 0
Source: U.S. Bureau of Labor StatisticsRental Housing Impacts
Percent of Renters With Slight or No Confidence in Ability to
Pay Next Month’s Rent, Final Week of the Month
$200,000 and above • 32% of all renters, regardless
$150,000 - $199,999
June of income, reported slight or
May no confidence in being able
$100,000 - $149,999 to pay the following month’s
$75,000 - $99,999
rent.
• Over the past month, renters
$50,000 - $74,999
making $75,000 or more
$35,000 - $49,999 became increasingly
concerned about their ability
$25,000 - $34,999 to pay rent.
Less than $25,000
0% 10% 20% 30% 40% 50% 60%
Source: U.S. Census Bureau Household Pulse Survey, May 21 – May 26, June 25 – June 30.Rental Housing Impacts
Used in the Last 7 days to Meet Spending Needs • Renters with slight or no
confidence in their ability to
Borrowing from friends or family
pay next month’s rent most
often cited borrowing and
Unemployment insurance (UI) benefit payments
unemployment insurance to
Money saved from deferred or forgiven payments (to meet their spending needs.
meet spending needs)
• The expiration of expanded
Stimulus (economic impact) payment unemployment insurance
benefits at the end of this
Credit cards or loans month coupled with the
payment type ranked third,
Money from savings or selling assets savings from deferred
Regular income sources like those used before the
payments, is particularly
pandemic worrisome for the rental
0% 10% 20% 30% 40% 50% 60% 70%
housing industry.
Source: U.S. Census Bureau Household Pulse Survey, June 25 – June 30Apartment Industry Impacts
Hardest Hit Metro Areas for Rent Collection
(Change from prior year in percent of households paying partial or full
rent)
July 1 - July 13 • Las Vegas, New York and
Los Angeles remained at the
Las Vegas
bottom for rent collection
New York
through July 13th.
Los Angeles
Seattle
• The appearance of several
West Palm Beach
Florida cities in the bottom 10
San Jose
should come as no surprise
Fort Lauderdale
given the scaling back of
Orlando
reopenings due to the surge
Indianapolis
of Covid-19 cases.
Sacramento
-6.0% -5.0% -4.0% -3.0% -2.0% -1.0% 0.0%
Source: RealPage, Inc. Rent Payments July 1 – July 13, 2020Apartment Industry Impacts • Demand has improved since April, however absorption during Q2 2020 was far behind second quarter averages from the previous five years. • Leasing volume progressed in June, exceeding the new resident demand recorded in June 2019. • Occupancy held strong at 95.3% due to high resident retention; however occupancy rates are expected to drop. • 57% of residents opted to renew their initial leases during the second quarter, surpassing the average of 52%. • Rent collections are solid, but there’s near-term vulnerability. • Effective asking rents are declining for the first time in a decade, down by 2% since Q2 2019. • Executed new lease rents are beginning to stabilize but are expected to decline in the near-term. • Apartment deliveries in Q2 totaled 82,104 units, bringing year-to-date completions to 154,404 units. • Transaction volumes have fallen significantly, although apartment sales prices are still at all-time highs as of mid-2020. Source: U.S. Summer Apartment Market Update by RealPage, July 14, 2020
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