Covid-19 Economic Update

May 11, 2020

Coronavirus Economic Impacts

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Unemployment RatesOfficial Unemployment Rate U6 Unemployment Rate

Sources: U.S. Bureau of Labor Statistics

• The U6 unemployment rate measures all unemployed people plus those marginally attached to the labor force (not actively seeking work now) plus those employed part-time for economic reasons.

• This alternative measure of unemployment ballooned to 22.8 percent in April, its highest level on record.

April 2020

Coronavirus Economic Impacts

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April Monthly Job Losses Selected Industry Sectors

Total Private Sector

• Private sector employment shrunk by 15.1% from March to April.

• Arts Entertainment & Recreation, Food Service & Drinking Places and Dentist Offices each lost more than half their workforces in just one month.

Sources: U.S. Bureau of Labor Statistics

Coronavirus Economic Impacts

• Consumer credit outstanding fell $12B in March, its first monthly decline since 2011.

• Non-revolving credit (student loans, auto loans) increased by $16.1B but revolving credit (credit cards) contracted by $28.2B,the largest monthly decline since the data series’ inception in the late1960s.-$40

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Outstanding Consumer Credit

Non-revolving Credit Revolving Credit Total

Sources: Board of Governors of the Federal Reserve System

Apartment Industry ImpactsMost Impacted Markets

New YorkSan JoseOrange CountyAustinLos AngelesBostonNashvilleSan FranciscoSacramentoSW Florida Coast

Source: COVID-19's Impact on Multifamily Real Estate by Yardi, May 6, 2020

Least Impacted Markets

BaltimoreLouisvilleInland EmpireAlbuquerqueIndianapolisSalt Lake CityCharlotteSan AntonioSt. LouisPhiladelphia

• Yardi Matrix rated the impact of Covid-19 on apartment markets by the following factors:

– Prospect Volume– Availability– Approvals– Notices

Apartment Industry Impacts• The leasing season has resumed, as prospects have adjusted to self-guided and virtual tours. Leasing activity has dramatically picked up since the last week in April.• Weekly apartment listings views from RENTCafé are up 16.7% since 2019 as of May 3rd. • Leasing call center volume has also surged by 155% year-over-year.• A warning sign for Class A properties is if increased concessions start a cascading decline in rent.• Small floor plans in Class A properties in major cities are struggling as younger renters who do not have a tie to the city are terminating leases and moving home.• Short-term rental exposure is another smaller, but potentially concentrated risk factor.• Federal relief to individuals should limit multifamily property financial distress at least until August.• 5.8% of multifamily CMBS loans were 30+ days in default in April, up from 2.8% in March.• Debt market conditions have improved since Fed included Agency CMBS in the Term Asset-Backed Securities Loan Facility (TALF).

Source: COVID-19's Impact on Multifamily Real Estate by Yardi, May 6, 2020