Rent Payment Struggles Continue
Recent reports detail a downward trend in residential rent collections as stakeholders seek solutions.
More than six months into the coronavirus pandemic, multifamily trade groups and advocates are worried about the cascading effects of falling rent payments.
While some reports have found that collections haven’t dropped as drastically as many had feared, numbers are still down from the same time last year. And with federal rent relief measures stalled in Congress, the expiration of additional unemployment benefits and continued job losses across the country, industry leaders fear the worst is yet to come.
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Since April, the National Multifamily Housing Council has released a report on rent collections that reflects more than 13.4 million professionally managed units. NMHC’s Rent Payment Tracker has consistently updated its numbers from industry data providers, offering a helpful look at where things stand. As of Sept. 20, 90.1 percent of renters had paid September rent, according to NMHC. The number is a 1.7 percentage point drop from the same time last year.
However, and as NMHC has itself pointed out, the tool leaves out a wide swath of the multifamily market. According to a July survey of small landlords in the U.S. by The Terner Center for Housing Innovation at the University of California, Berkeley, and the National Association of Hispanic Real Estate Professionals, 57 percent of respondents said their rent collections are down from the first quarter, with 30 percent of respondents saying they are down more than 25 percent.
A widespread issue
Other industry surveys and reports have helped shine light on where rent collections stand. A report released in mid-September by the Mortgage Bankers Association’s Research Institute for Housing America (RIHA) found that nearly 11 million households fell behind on their rent or mortgage payments during the first three months of the COVID-19 pandemic. While government stimulus programs and employees getting back to work has led to an increase in the number of payments, report authors said Congressional gridlock and increasing numbers of COVID-19 cases pose a “real risk” to the ability of renters to make upcoming payments.
Apartment List, a national rental listing platform, reported earlier this month that in the first week of September, 32 percent of renters had not paid their full rent payment. The study also found that 31 percent of renters started September owing back rent for previous months. Of those who had fallen behind on payment, many stacked up credit card debt, sold off assets, or dipped into retirement savings to stay afloat.
“The high overall rates indicate that even those who have managed to stay current on rent may not be in great financial health,” Apartment List wrote in its report.
“We need solutions now. We can no longer wait for the federal government to bail us out,” said CHIP Executive Director Jay Martin.
In the New York City metro area, the Community Housing Improvement Program, a group representing 4,000 landlords of rent-stabilized properties, found that more than 19 percent of residential tenants had paid no rent in September and the residential vacancy rate reached 12.5 percent, according to a survey of its members. The responses received represented at least 80,000 units in New York City.
CHIP Executive Director Jay Martin called on city and state leaders to take measures to help bail out the “affordable housing ecosystem” for both renters and landlords.
“We need solutions now. We can no longer wait for the federal government to bail us out,” Martin said in prepared remarks Sept. 17.
Reports from the Joint Center for Housing Studies have also identified metros around the country with the most vulnerable populations of “at-risk” renters.
Where relief measures stand
While industry trade groups and housing advocates agree that the problem can only be solved by a major injection of capital at the federal level, it hasn’t stopped some cities and local partnerships from launching their own relief funds.
Rental assistance programs in New York, Louisiana and Los Angeles were overwhelmed with demand soon after launching. In Houston, which has a renter population of nearly 2 million according to 2017 Census data, a $15 million relief fund created by the city in mid-May was drained just 90 minutes after it opened to applicants.
One recent effort to help those in need is Project Parachute, a coalition of more than 40 multifamily owners, nonprofits and city agencies in the New York City area that joined forces to help renters stay in their homes. The project launched in May with an initial $4 million investment from property owners and recently received an additional $3 million from several philanthropic donors, according to The Real Deal.
As the pandemic grinds into the fall season, the expiration date of the federal eviction moratorium enacted earlier this month draws closer and the widespread need for relief measures becomes more clear, industry groups and advocates continue to call on a deadlocked Congress to pass legislation.
“Without federal assistance, 30 to 40 million people will be at risk of losing their homes when the federal eviction moratorium ends on December 31,” the National Low-Income Housing Coalition said in a memo to its members Sept. 21. “The only way to protect these renters is for Congress and the White House to return to the negotiating table and work out a deal now.”