Rental Payment Stats Questioned

Columnist Lew Sichelman looks at the most recent rental payment numbers.

With June’s rent payments now due, a voice in the wilderness is questioning whether statistics showing how many residents made their April and May rents are accurate—or if this month’s numbers will be, too.

Jonas Bordo, the founder of Dwellsy, a 15-month-old rental search engine, doesn’t think so.

Bordo bases his claim on an admittedly random, unscientific poll he took on May 21 and 22 in which he asked renters on Twitter if they will have difficulty paying their rents this month. More than 4,600 responded. “I was shocked,” Bordo said in a phone interview. “It clearly caught people’s attention.”

More stunning, perhaps, is that less than half—48.5 percent—said they were not confident they’d be able to meet their June obligations. That compares to the 87.7 percent who paid their rent in May, according to the National Multi-Housing Council, and the 89.9 percent NMHC says paid in May 2019.

Bordo decided to query renters because he couldn’t square the fact that 38 million people are out of work and that 39 percent of all households don’t have $400 on hand to cover an emergency with the NMHC’s rental figures. “How on earth is it possible that more than 38 million Americans, many of whom had little to no emergency funds, all lost their jobs and were still able to pay their rent?” he wondered.

A Closer Look

The Dwellsy founder doesn’t doubt the NMHC’s figures. But he doesn’t believe they tell the entire story. He supposes that because of the way they are sourced—from five property management software companies that serve the largest management companies, Bordo says—they are skewed toward luxury properties.

“The apartment communities that those property managers operate are overwhelmingly higher-end properties,” he said. “As a result, this data is representative of the more affluent end of the market, where apartment dwellers are far more likely to be working from home than unemployed.”

What the database does not include are the millions of rentals owned and operated by Mom and Pop investors who don’t use sophisticated software. Bordo pointed out that according to the Department of Housing and Urban Development, 75 percent or so of the U.S. rental market is comprised of properties owned by individual investors who only have just one to four units.

Bardo, whose rental site lists some 8 million units, ranging from single-family houses to large investor-owned properties, says less affluent renters tend to live in these single-family residents and two- to four-unit buildings. And because they aren’t covered in the NMHC surveys, the results “are not reflective of the average American renter.”

He argued that more and better research is necessary. But he suspects that the actual June payment numbers will be somewhere between what the NMHC reports and what his rump survey found.

“It’s probably not going to be 48 percent,” he told me. “That would represent unimaginable hardship for millions upon millions of people. But it’s probably won’t be in the high 80s, either. It’s probably somewhere in the middle, in the 60s or 70s.”

Renter Demand

Meanwhile, after a year-over-year 40 percent skid in searches for long-term rentals, demand has bounced back, according to Google search volumes and traffic on Zumper, another apartment search engine. But because of the coronavirus, renters seem to be refocusing their ideas about what they want from their living spaces.

“Renters are looking for apartments again,” Zumper says in a new report. “But they find themselves in a new rental landscape with shifting priorities and feelings in response to the pandemic.”

The report is based on a poll of some 500 people who were looking on its site in mid-April.

“Given the financial consequences” of the pandemic, the report says, “a significant portion of those looking to move are likely renters who are in need of cheaper rent.”

A healthy 35 percent of the respondents have not at all been impacted financially as a result of the disease. But another 35 percent said they either lost their jobs or took pay cuts. Additional costs were incurred by 19 percent, and 13 percent said their co-renter had been affected financially by the virus.

Still, only a quarter of them said they have trimmed their budgets. And 5 percent said they have actually increased the amount they expect to spend to find what they want. Moreover, while nearly 20 percent said they have expended their search radius, probably to look for less expensive units in other neighborhoods, 9 percent have narrowed the area in which they want to reside.

Going Virtual

The survey also shows that many would-be renters are looking for new places via virtual tours. It doesn’t say whether they are doing so out of necessity or if they liked the process; only that 34 percent looked around on their electronic devices as opposed to making on site visits.

Still, they’d rather have a first-hand look, according to Zumper data analyst Crystal Chen. Some 52 percent said they’d risk the possibility of infection to make in-person visits. That’s in contrast to the 32 percent who would rather look virtually.

(In its April national rent report, Zumper found that four out of five renters would be open to leasing an apartment they’ve only seen online.)

When online, they said they faced numerous challenges. Chief among them: Not hearing back from their landlords. Some 55 percent said they “are most concerned” about return calls or e-mail inquiries. And the main reason: Many property managers “may not be actively searching for new renters during shelter-in-place and stay-at-home orders,” Chen said.

Just over 43 percent are worried about their ability to pay for what they want, and 24 percent are uncertain about their incomes. But 43 percent also said they fear scams. Smaller percentages worry about meeting potential landlords and the possibility that the photos and size descriptions they see online don’t match reality.

Even as some renters have expanded their search horizons, only 22 percent said commute times are a concern. Rather, a slim majority—55 percent—said their most important criteria is the image of the property in which they eventually decide to put down stakes.

Almost half said that amenities are important, while 42 percent are most concerned with floor plans. Descriptions are important to 45 percent of the respondents, chiefly because “it’s hard to assess the size of an apartment from just online videos or photos,” Chen said.