While single-family home sales and construction have shown stirring resilience in the face of the COVID-19 pandemic, news on the rental side has not been as encouraging.
Ninety percent of apartment households made a full or partial rent payment by August 20, according to the latest National Multifamily Housing Council (NMHC) Rent Payment Tracker report. That’s down 2.1 percentage points (237,056 households) from the share who made a full or partial payment by August 20 last year, and down 1.3 percentage points from the share who had paid by July 20.
With rent collection rates on the decline and renters so far disproportionately impacted by labor losses during the COVID-19 crisis, Doug Bibby, president of the NMHC, implored legislators to come up with a solution to help renters maintain their housing payments.
“Lawmakers in Congress and the Administration need to come back to the table and work together on comprehensive legislation that protects and supports tens of millions of American renters by extending unemployment benefits and providing desperately needed rental assistance,” Bibby said. “The industry remains encouraged by the degree residents have prioritized their housing obligations so far, but each passing day means more distress for individuals and families, and greater risk for the nation’s housing sector.
“If policymakers want to prevent a health and economic crisis from quickly evolving into a housing crisis, they should act quickly to extend financial assistance to renters.”
According to rental website Apartment List, 32% of Americans entered August with outstanding housing debt in the form of missed rent or mortgage payments from prior months. Fifteen percent of renters had accumulated rent debt of less than $1,000, while 11% owed between $1,000 and $2,000. Five percent owed more than $2,000.
And per Apartment List’s data, those missed housing bills are compounding by the month. Of the renters with unpaid housing bills, two-thirds haven’t made a complete August payment. Sixty-six percent of renters with outstanding housing debt said that they are worried about facing an eviction within the next six months. Overall, 37% of renters indicated that they are at least somewhat concerned about facing an eviction.
Those eviction concerns are growing with several state eviction moratoria already expired and the last eviction protections established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act elapsing this week. An executive order by President Donald Trump earlier this month pledged to look into further protections, but its text makes clear that it doesn’t renew the protections that were already in place.
With government support ebbing, many renters are negotiating — or at least attempting to negotiate — with landlords to address their unpaid rent obligations. Among renters who entered August with housing debts, 67% have approached their landlords to discuss a payment plan, according to Apartment List. Twenty-eight percent said that they reached an agreement or renegotiated lease terms, while 21% were in the process of negotiation. Eighteen percent requested a negotiation, but were denied.
And of course, the financial hardships of renters are getting passed along to landlords and property management companies as well. An August analysis by Zillow found that 53.8% of the income from a typical rental unit ends up going into fixed costs associated with property ownership, from mortgage payments and property taxes to maintenance and capital improvements.
Add to that the other expenses of running a rental business, like personnel, landscaping and other costs, and you have an average annual return per unit that has dropped from 13.3% in 2015 to 6.4% to last year — and that’s before the pandemic took hold.
“Tenants and landlords are of course affected when payments are missed,” said Brian Miller, director of marketing at Berger Rental Communities, via a Zillow statement. “And taking it a step further the partners we work with all have individuals that rely on companies like ours operating as we have been. So there are plenty of pieces of a larger ecosystem that are feeling an impact.”
