News feed - Multi-Family housing

Millions of Renters Are In a Deep Financial Hole

At least three million renters who were employed last March lost their jobs and were still out of work in November.

By Les Shaver                                                                  January 13, 2021                                          GlobeSt.com

 

The recent stimulus will help millions of renters.

The additional stimulus payments will bring their typical rent burdens from more than 80% of their income to less than half of that percentage, according to a Zillow analysis. But even with this help, millions of people are behind on their rent payments and face an incredible challenge catching up.

At least three million renters who were employed last March lost their jobs and were still out of work in November, according to Zillow. More than a million of those people are in the accommodation and food services industries, which have been devastated by restrictions aimed at limiting the spread of COVID-19

For those workers who lost their jobs, federal and state unemployment insurance is now the primary income source. The typical unemployed renter living alone spent 81.2% of that income on rent in November, but that should come down to 43% after they receive the $300 a week from the current stimulus package.

In early January, the number of renters who could make payments continued to decline. In its recent Rent Payment Tracker, The National Multifamily Housing Council found that 76.6% of apartment households made a full or partial rent payment by January 6. Compared to January 6, 2020, this is a 1.7 percentage point or 192,613 household decline. It compares to 75.4 percent that had paid by December 6, 2020.

Renters have been able to get by with the help of legislation passed last year, with the additional $600 a week in unemployment insurance payments from the CARES Act bringing down the rent burden to 29.5% for unemployed renters paying the typical rent, according to Zillow.

But even with eviction moratoriums, Moody’s Analytics estimated that nearly 12 million renters would owe an average of about $6,000 in back rent and utilities by this month. For low-income renters, it won’t be easy to catch up. Low-income renters typically spent 53.1% of their income on rent in 2019. Only 51% of those renters said they could afford an unexpected $1,000 expense.

“Even though supplemental assistance has resumed, there are financial wounds to heal from the three-month period when some renters were sending more than 80% of their unemployment benefits out the door on the first of the month,” said Chris Glynn, senior economist at Zillow in a statement.

Problems could again arise after March 14, when the current $300 weekly supplement expires.

As eviction moratoriums are lifted, eviction could be a significant issue in Q1 or Q2, according to John Loper, an associate real estate professor at the University of Southern California. However, with about 90% of rents being collected, he says only 10% of rental stock has eviction potential.

Multifamily Rent Collections Down 24% in December

Data from Rentec Direct shows that renters continue to struggle to make rent payments during the pandemic. 

 

By Kelsi Maree Borland                                              December 16, 2020                              GlobeSt.com

Apartment rent payments continued to decline in December. As of December 10, rent collections were down 24% from March collections, according to research from Rentec Direct, which aggregates rent collection data to analyze the impact of the pandemic.

Rent payments continue to trend well below March collections; however, payments have improved since September 2020, when collections were 35% below March and a record low for the pandemic. In October collections were down 28%, and in November, payments were 27% below March.

 

Whether or not payments will continue to improve in December is still in question. Rents payments are already down 24% in the first 10 days of the month, generally a good indicator of payment activity. However, the increase in COVID-19 cases across the country and the absence of a new a stimulus plan has put more pressure on renters to make payments.

National Multifamily Housing Council found that rents fell 8% in the first six days of December over the previous month with renters making 75.4% of rent payments—similar to the data from Rentec Direct. The NMHC data found the decrease concerning, but also said that the first six days of the month weren’t necessarily an indicator of total collections for the month.

While renters are struggling to make rent payments, they are utilizing online payment tools more frequently. Online payments surged 8.1% in December, according to the Rentec Direct report, and online rent payment options dramatically increase collections for landlords. In November, online payments increased 1.8% compared to March and in October, payments made online were up 4.3%. Online payment activity has increased consistently since September.

Landlords and property managers are showing increased interest in the online rent payment tools as a result of the pandemic. In November, rent payment applications increased 4.1% over February 2020. This is down from the pandemic peak in August, but interest in online payments has grown throughout the pandemic.

Landlords jarred by sudden drop in rent collection

As pandemic intensifies, 1 in 4 tenants paid nothing last week

  By: Georgia Kromrei                                                       December 08, 2020                                   The Real Deal

 

Market-rate apartment owners just reported the lowest rental payment rate since April.

In its monthly survey, the National Multifamily Housing Council found that only 75 percent of renters in 11.5 million market-rate apartments paid some or all of their rent by Dec. 6. The figure represents a 5-percentage-point decrease from November, and is nearly 8 points lower than it was a year ago.

The president of the Washington, D.C.-based lobby group, Doug Bibby, said the results should come as no surprise.

“As the nation enters a winter with increasing Covid-19 case levels and even greater economic distress — as indicated by last week’s disquieting employment report — it is only a matter of time before both renters and housing providers reach the end of their resources,” said Bibby.

He also said that the group, which represents landlords, was encouraged by news of a potential relief bill from Congress. The specifics have not been announced, but Virginia Sen. Mark Warner told CNN that the four-month, $908 billion package will include rental assistance, and is expected this week.

In the meantime, as Covid-19 cases in the United States pass the 15 million mark, property owners are hoping renters will continue to pay — even as other expenses fall by the wayside. In his 2016 landmark study on eviction in low-income communities, Princeton researcher Matthew Desmond noted that “rent eats first,” meaning it is prioritized over other household expenses.

Indeed, the consistency of rent payments in the multifamily sector have made the asset class a relative safe haven for investors during the pandemic, especially in areas where regulations do not prevent rehabbing apartments and raising rents.

Although examples of apartment distress have so far been isolated, all might not be well in the multifamily sector.

The NMHC rental tracker does not distinguish between partial and full payments. And there is no accounting for instances where tenants and landlords may have negotiated a plan to use security deposits as payment — a practice which was adopted officially by some locales to keep rent payments flowing.

But the survey is conducted the same way each week, and the drop in collection last week was the largest since early in the pandemic.

A weekly survey conducted by the Census Bureau found that in November, nearly 9 million out of 53.3 million rental households were not caught up on rent. Households behind on rent were disproportionately lower-income, an indication that the recovery from this crisis will be more uneven than that of past crises.

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