The National Multifamily Housing Council (NMHC) is calling on U.S. lawmakers to include $100 billion in direct renter assistance in the next pandemic relief package, despite positive numbers on May rental payments.
Even as the unemployment rate surges across the country, NMHC’s rental payment tracker found more than 80% of apartments made a full or partial rent payment by May 6. That compares to 78% that made a payment by April 6. The rent tracker survey looks at 11.4 million professionally managed apartment units across the country that vary by size, type, and average rental price.
“Despite the fact that over twenty million people lost their jobs in April, for the second month in a row, we are seeing evidence that apartment renters who can pay rent are stepping up and doing so,” said Doug Bibby, NMHC president. “We expect May to largely mirror April, when the payment rate increased throughout the month as financial assistance worked its way to people’s bank accounts.”
While this new is a pleasant surprise for many in the multifamily arena, Bibby believes over the course of the month, there will be millions of households that won’t be able to cover their rent or other financial commitments caused by the crisis.
While landlords and lenders are agreeing to concessions, whether it’s reduced or deferred rent, the number of mortgages in forbearance continues to climb.
“Apartment owners have $1.6 trillion in outstanding mortgage debt. If they can’t cover their debt, we might see a wave of multifamily foreclosures that could rival the single-family foreclosures that occurred during the Great Recession,” said Bibby.
Representatives from some of the largest multifamily companies came together on the NMHC webinar to share insights on the results of the survey, as they come together to continue to support residents. One multifamily company initiated a pay-it-forward campaign for their properties across the U.S., with roughly 300 properties actively engaged. Alliance Residential offered residents a $25 discount on rent if they paid on or before the 3rd of the month, where $10 goes into a pool allocated to others who may be struggling.
“We wanted to find an easy way to engage with out owners and some of the residents who wanted to help their neighbours,” said Brad Cribbins, Alliance Residential CEO. “Some of our owners are taking an even more aggressive approach by offering up to 50% discounts to people who follow through with a full payment plan.”
Because of this flexibility from owners, as well as stimulus support from the government, the percentage of renters who are asking for partial payment plans is relatively small.
“What we have seen is a lot of operators absorbing fees,” said Chase Harrington, COO of Entrata, a property management software. Because late fees are not being charged, and some ancillary fees including convenience fees for online payments are being absorbed, Harrington says average rent isn’t really fluctuating.
Some markets were lagging behind in rent payments compared to others. In both April and May, some of the weaker markets included New York, Los Angeles, Las Vegas, and New Orleans. While Florida surprisingly held up in April, data showed some deterioration in May, particularly in Orlando and Fort Lauderdale.
“Four areas I’ll be watching this month, as they did come in below expectations is Seattle, San Francisco, Atlanta, and the big surprise, Washington DC, where particularly the Maryland suburbs seem to be struggling a bit” added Greg Willet, RealPage chief economist.
As NMHC president Doug Bibby closed out the webinar, he noted that this is unprecedented cooperation for the multifamily industry, as it’s a valuable resource to be working together. He added that the outlook is heartening and a bit surprising, and he saluted renters for treating their obligations seriously, and owners for their considerations.
“We are not ready to have a party to celebrate yet,” he added. “What you heard from the data providers is there are a growing number of warning signals percolating and those are what we have to watch very carefully over the rest of this month, but also going forward into the summer.”