Landlords and Renters Look at the Month Ahead
Rent Payments in Limbo
Unemployment claims continue to climb as a result of the pandemic. By the end of last week, another 3.84 million people filed jobless claims for the first time, exceeding economists’ expectations and bringing the total number of claims in the past six weeks to more than 30 million.
These job losses have caused ripple effects across many sectors, including the real estate industry. Though rent collection in April was more successful than some predictions warned it might be, many are worried that May will be a more difficult month for renters and subsequently for landlords.
In April, 69% of renters had made a complete or partial rent payment during the first week of the month and by April 26, that was up to 92%. Analysts are trying to determine if this trend will continue in May. Some are hoping for the best while others fear that the uptick in job losses will make May a more difficult month than April was for real estate companies.
Government assistance in the form of loan forbearance and unemployment benefits will help soften the blow, but many property owners both large and small are anxious about cash flow and how to cover their mortgages and property taxes.
In many cases, tenants’ ability to pay rent will depend not only on when they lost their jobs, but when they received unemployment benefits or stimulus checks. The arrival of this aid has been difficult to predict, leaving landlords unsure about what to expect in the weeks ahead.
Larger real estate companies, like Equity Residential and Camden Property Trust have reported more successful rent collection efforts than smaller, family-owned businesses. These mom-and-pop companies sometimes have smaller cash reserves and are more vulnerable during downturns. Doug Bibby, President of the National Multifamily Housing Council explained , “We’re nervous… The only mitigating factors are the direct payments to households, individuals and children, and the unemployment checks that are coming in—and those are coming in sporadically.”
Some renters are already behind on April payments, and now face uncertainty about if they will be able to catch up. In New York, some have joined a rent strike to insist that Governor Cuomo forgive monthly payments for the foreseeable future. This understandably makes landlords uneasy about the upcoming month.
For those struggling to pay rent currently, an honest renter-to-landlord conversation could be a good place to start. Many landlords are working with their tenants to mitigate concerns, including finding case-by-case solutions such as partial payments or longer-term repayment plans. The CARES Act also includes temporary eviction moratoriums to help renters in less flexible situations. Local resources for renters are also available in many cities at the moment.
Though both renters and landlords are in uncertain, anxiety-provoking situations, various forms of help are available. Worst-case-scenario predictions for the real estate industry in April turned out not to come true, and many have their fingers crossed that May’s numbers will follow suit.
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