Two national reports on rent collection show that most tenants are meeting their rent obligations, although the results are slightly lower than last month. Eviction moratoriums are also being lifted in some markets, making it possible for landlords to address a difficult financial situation with an eviction, if needed.
National Multi-Housing Council Rent Collection Report
The National Multi-Housing Council keeps track of rent collection for apartments. (1) In the Council’s rent collection report for July, it says, 77.4% of renters made a full or partial rent payment by July 6th. Property managers usually give renters five days to pay their rent, so they can report “on time” payments by the 6th.
Those results are a few percentage points lower than last July, when 79.7% of renters had paid by the 6th. Both those numbers are slightly lower than just last month, in June, when 80.8% of renters had paid by the deadline.
Council researchers compiled data from more than 11 million rentals across the nation. That includes rentals of all sizes, types, and rent levels. The report comes after about four months of an economic shutdown that has left around 20 million people unemployed. Some 20 million people are also collecting unemployment benefits which include an extra $600 a week. That helps explain some of the strong rent collection numbers we are seeing.
Apartment List Rental Collection Report
Apartment List is also tracking monthly housing payments which includes apartments, condos, and single-family homes along with people who pay rent or a mortgage. (2) That data shows that 81% of both renters and mortgage holders have either paid in full or made a partial payment for the month of July. If you break that figure down, 68% paid in full, and 13% made a partial payment.
The number of people who paid in full is the same as June, at 19%, but there were more partial payments made this month. That also means those people have agreed to payment plans, so landlords can expect full payment at some point. Apartment List says, most of the payments that are missed in the first week of the month are paid before the month ends. It says that last month, 89% of the people in the survey had paid their housing payments “in full” by the end of the month.
Housing Insecurity is Growing
Apartment List says, housing insecurity is growing among people concerned about paying their bills. The extra $600 a week unemployment benefit is only authorized through the end of the month and Congress hasn’t approved an extension of that program… yet. That could still happen. Eviction moratoriums have also ended in many states or will end soon, and that’s putting pressure on renters. It’s also making it possible for landlords and property owners to evict tenants if they need to. It’s an unfortunate situation, but landlords can’t provide free housing.
According to NBC News, renters in 42 states and the District of Columbia were protected by eviction moratoriums during the worst of the pandemic. NBC says, those protections have now dwindled to a little more than 12 states. Legal experts are predicting a wave of evictions in August. (3)
Higher Rent Collection with Good Management
We’ve done several webinars with our own property teams and have addressed rent collection throughout the pandemic. Our teams have seen consistently higher rent collection numbers than the reports I’ve just mentioned. That’s at least partially due to the strength of the job markets where they are located, along with careful tenant screening by our property management teams. One important part of that screening process is to choose tenants with jobs that are less vulnerable to layoffs.
The Bureau of Labor Statistics has a list of metropolitan areas and their unemployment rates for May of this year. (4) In Cleveland, which is one of our single-family rental markets, the unemployment rate was only 9.5% in May compared to 29% in Las Vegas. Cleveland has a strong job market with the fastest growing healthcare economy in the nation. It’s also home to at least ten Fortune 500 companies. Las Vegas relies on tourism and hospitality jobs, so it has suffered a tremendous amount of job loss during the pandemic.
The pandemic may also produce more foreclosures in the coming months as forbearance programs expire and homeowners don’t have the means to pay their mortgage. Many of today’s single-family rentals are the result of the foreclosure crisis during the Great Recession. That situation will probably not repeat itself, but an increase in foreclosures is likely, along with investment opportunities.
If you’d like to know more about the top U.S. rental markets, you’ll find a wealth of information at our website at www.realwealth.com. It’s free to sign up, and free to access our vast archives of information, including podcasts, webinars, and educational articles.
(1) July Rent Report: Multi-Housing News
(3) NBC News Article