In this Real Estate News Brief for the week ending April 4th, 2020… rent payments are now due, new data on top population growth cities, and how renters are dealing with their plans to move.
We begin with economic news from this past week, and the distribution of stimulus checks to American consumers. Adults earning less than $75,000 will get the full $1,200 amount. Parents will also receive $500 for each dependent child. The IRS is expecting those payments to start going out by the end of April. That should help many Americans pay their bills, including the rent. (1)
There’s been a lot concern among landlords about whether or not their tenants will be able to pay rent this month, because landlords also have bills to pay for rental properties they own, like mortgage, insurance, repairs, property management fees and property taxes.
At RealWealth, we have been interviewing property managers from around the country to get real time updates on how they are handling this unprecedented situation. Members of the network can access to those webinars
The overall consensus from the property managers we interviewed is that they are still receiving rents on time, and only a small percentage of their tenants are in the most affected industries of travel and restaurant services. The Indianapolis property manager said, there is a large biochemistry industry near the properties they manage and rent applications have increased. The Cleveland property manager said there is a large medical research industry, along with Birmingham, AL. The collection of rents depends very much on the strength of the local employer base.
RealWealth has also collected information on how property managers can take a proactive approach to communicating with tenants about their options for receiving local, federal and charitable grants. You can find more information about how landlords can help their tenants in our article 8 Tips for Collecting Rent During the Coronavirus (COVID-19) Pandemic. (2)
And help will be needed. The latest jobless report shows 6.6 million new jobless claims at the end of March. (3) That brings the total up to 10 million in two weeks because of all the pandemic-related shutdowns. By some estimates, we could see unemployment numbers hit 25 million over the next few months as a temporary situation.
Consumer confidence has suffered a bit, as you might expect. The Conference Board index fell from 132.6 to 120, which is the lowest it’s been for almost three years. It sank as low as 25.3 in 2009.
These unprecedented unemployment numbers are obviously expected to impact spring home sales. They were strong in February, before “non-essential” businesses were asked to shut down across the country. The National Association of Realtors says that pending home sales were up 2.4% in February, 9.4% higher than February of 2019.
It’s not clear what long-term effects we’ll see in the housing market, but NAR’s chief economist Lawrence Yun says, “Housing, just like most other industries, suffered from the coronavirus crisis but once this predicament is behind us and the habit of social distancing is respected, I’m encouraged there will be continued home transactions though, with more virtual tours, electronic signatures, and external home appraisals.”
The latest Case-Schiller home price report shows that prices were up 3.1% year-over-year in January. There’s a two-month lag in data so we don’t know yet how the coronavirus pandemic will impact home prices. Bill Banfield of Quicken Loans says, “I suspect once the stay-at-home orders are lifted, homebuyer demand will regain its footing, provided employment rebounds quickly.”
I would like to personally add, provided lending rebounds quickly. Right now, funding for jumbo loans and non-QM loans has dried up. This would dramatically affect home prices in the high end, that are over conforming loan limits.
But if you can get a loan, you can lock in even lower rates. Mortgage rates fell again this last week. Freddie Mac says the 30-year fixed-rate mortgage dropped 17 basis points to 3.33%.
In other news making headlines…
Top Cities for Population Growth in 2019
The U.S. Census Bureau released a report on 2019 population growth. On a percentage basis, the top 13 cities for population growth were in the Sun Belt which runs from North Carolina to Florida then West through Texas and the Southwest. The fastest growing city was Austin, due to its booming tech sector and affordable lifestyle. Raleigh came in second, most likely due to the Research Triangle and major universities. Phoenix and Las Vegas were 3rd and 4th respectively, likely drawing from Californians looking for a more affordable lifestyle with no state income tax. And 5th on the list was Jacksonville, likely due to its growing port and affordability.
Dallas/Fort worth, Orlando, Houston, Tampa, Atlanta, Salt Lake City, Seattle, and Indianapolis also made the Top 20 list of fastest growing metros.
Renter Demand Remains Strong
A new survey shows that renters are still on the move, despite the pandemic. RentCafé conducted a survey of 6,000 people looking for a new rental. (4) Of those 6,000 people, 56% said that finding a new place is still a priority. Just 17% said they would stay where they are and 16% still trying to make up their minds. A few were putting their plans on hold or considering a lease renewal.
Although some people expressed concern about moving in the midst of the pandemic, 45% said they had no concerns. Some also said they have no choice because their lease is expiring, while others feel they should find something cheaper because they may not be able to pay their rent in the future. RentCafé said in the report, “These survey results go to show that, whether it’s because of optimism, forced circumstances or other personal reasons finding a home takes priority.”
Many of the property managers we interviewed said the same thing. Applications were up in Indianapolis, Cleveland, Birmingham and Jacksonville.
(1) IRS Stimulus Timeline: Forbes
(3) Jobless Claims: MarketWatch
(4) RentCafé Report