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.
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“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.