Residents Exude Confidence In Face of Rising Rents

Lew Sichelman

A majority of landlords are planning to hike their rates this year, a move that is certain to displease a lot of their residents—and possibly push some into default. But for now, according to a new survey, more than four out of five occupants say they haven’t missed a payment in the last 12 months.

As the world moves into its third year of dealing with the pandemic, resident confidence is on the upswing, the survey of 2,163 renters found. In September 2020, only 57 percent of the renters queried had not missed a payment in the previous year. A year later, 82 percent had been on time 12 months in a row.

Looking forward, 77 percent don’t expect to miss a rent payment in the next three months, they told pollsters. That’s more than double the 38 percent who voiced the same sentiments in September 2020.

“We are seeing a light at the end of the tunnel,” commented Danielle Hale, chief economist at Realtor.com, the official listing site of the 1.4 million-member National Association of Realtors. “The job market has made a dramatic comeback, and despite rising prices across the board, renters are feeling more financially stable and overwhelmingly confident in their ability to pay their rent.”

Perhaps that’s why nearly half the renters surveyed said they plan to move within the next 12 months. But largely because they haven’t saved enough for a down payment for a place of their own or don’t think they can qualify for funding, slightly more than half of those who plan to move will take up occupancy in another rental.

The survey, which was released in mid-February by Avail, a part of the Realtor.com network, also polled 1,156 landlords, three out of five who said they anticipate raising their rents on at least one of their properties in the coming 12-month period.

The majority of those landlords, 45 percent, expect to increase their rates between 5 and 10 percent, the survey found. But 38 percent will be somewhat more cautious and won’t go above 5 percent. The rest, though, will go higher—9 percent by 10 to 15 percent, 5 percent by 15 to 20 percent and 3 percent by more than 20 percent.

NAR itself predicts rents will rise at 7.1 percent pace this year, which is higher than the trade group sees for house prices. But Yardi Matrix suggested earlier this month that rent growth will slow to 6.5 percent in the top markets like Tampa and Raleigh to 3.4 percent in Washington and the Twin Cities.

In 2021, rents rose 10 percent of more in 90 percent of the nation’s major markets, Yardi reported. In some spots, rents rose by more than 20 percent.

SFR Comparison

As for the single-family rental sector alone, a new CoreLogic report says prices grew an average of 7.8 percent last year compared to just 2.6 percent in 2020. At the same time, though, rents ended the year with a 12 percent annual gain in December as compared to 3.9 percent 12 months earlier. CoreLogic did not make any predictions for 2022.

At the same time, Invitation Homes, one of the country’s largest investors in house rentals, reported that in its overall footprint, rents in new leases signed in the fourth quarter rose by 17.3 percent. But in places like Phoenix, Tampa and Las Vegas, rents were up over 20 percent in the period. For 2021 as a whole, new residents paid 14.4 percent more.

The company also jacked up rents for existing residents, but only about half as much in the fourth quarter—9 percent—and just 6.7 percent for the entire year.

Rental Assistance

Meanwhile, the Avail survey also questioned respondents on their awareness of rental assistance programs, finding that it is still surprisingly low considering that early in the pandemic, Congress appropriated $47 billion in funding to help struggling renters who lost jobs or income due to COVID-19.

Just 51 percent of renters said they are aware of programs created to help renters and landlords during crisis. Ditto for a whopping 71 percent of landlords. But among the renters who are aware of emergency rental assistance programs, only 21 percent believe they would be eligible to receive assistance to cover missed rent payments.

A new Government Accountability Report goes further, saying that many renters who struggled to pay their rent also faced challenges accessing the assistance that was available to them, The Treasury Department manages Emergency Rental Assistance funding, providing grants to state, local and tribal governments. The grantees then cut checks to renters, landlords and utility providers to cover past-due rent payments or utility bills.

The GAO also found cases where funds have been misused, including several instances where as much as $100,000 may have been paid in error. Treasury is investigating those cases.

The GAO, which is the investigative arm of Congress, says just under half-a-million people were receiving rental assistance at the peak of the program. But some renters struggled to access it, particularly when it first became available. Some had trouble demonstrating financial hardship or housing instability, so grantees could not quickly approve their applications.

Allowing renters to self-attest their eligibility improved access. But that also opened the program to more fraud. And the GAO now says Treasury still hasn’t taken “the necessary steps” to prevent and address potential payment errors when administering renal assistance program.

Treasury largely relies on grantees to prevent investigate, and address instances of misused funds. However, DoT hasn’t evaluated these efforts or provided grantees with sufficient guidance on mitigating risks, including fraud risks, the GAO says. It has recommended that the department design and implement procedures to monitor and evaluate grantees’ programs and controls. And it has urged Treasury to put in place processes to help the timely identification and recovery of grantees’ overpayments.

But even as eviction moratoriums have been lifted, the vast majority of landlords—82 percent—told Avail pollsters they have not initiated eviction proceedings against any resident in the last 12 months.

Going forward, though, a third said just one missed payment would cause them to push for eviction. About half said they’d wait for two or three months of missed payment for acting.