The Rent Is Getting Paid. How?
The Rent Is Getting Paid. How?
By Kriston Capps, CityLab, May 8, 2020
Four out of five apartment renters in the U.S. were able to make their rent payment in May. But the data only tells part of the story.
Dennis Schvejda, a landlord who owns two apartment buildings with 16 units in Walton, New York, was worried going into May. His tenants are of modest means; rents at his units average about $550 a month. After expenses — which include maintenance and utilities as well as county, town and village taxes — his taxable apartment income is about $115 a week, he says. With the U.S. facing unprecedented job losses and the steepest economic reversal since the Great Depression, he didn’t know if the May rents would be coming. If not, he says, he would have been forced to sell.
To Schvejda’s surprise, May rent was better than April. All but two of his tenants were able to fully pay their rent on time, and one tenant repaid the April payment they had missed. “With Upstate New York beginning to open for business soon, I’m hopeful that my extreme concern about nonpayment of rent was overblown,” he says.
While employers cut 20.5 million jobs last month, most apartment renters nevertheless managed to pay the May rent, according to figures released by the National Multifamily Housing Council on Friday. By May 6, only 19.8% of renters of the nation’s 11.5 million apartment units had failed to pay rent. That’s a surprising figure — not just given the double-digit unemployment rate, but because May 2020 rent payments roughly line up with May 2019.
“Residents and owners are working together with payment plans, allowing credit card payments and other flexible options,” says Doug Bibby, president of the National Multifamily Housing Council. “But a key question is how long will renters be able to continue to rely on unemployment insurance, draw upon savings, or utilize credit cards. This is why Congress must pass legislation to provide direct assistance to renters in the next coronavirus aid package.”
These figures offer only a snapshot of the uncertainty facing renters. The council tracks data for market-rate apartments, which means the numbers exclude tens of millions of renters who live in single-family homes or subsidized rentals. Still, the figures show that apartment renters are making good so far — which for the unemployed means dipping into savings, using one-time stimulus checks, or lucking out in the long waits to receive unemployment benefits.
Tenants and landlords alike worried about how they would survive over the last two months. After the pandemic brutalized the economy in March, the April rent loomed like a slow-rolling disaster, and indeed, at the end of the first week, nearly one-third of apartment renters had not paid the rent. By the end of the month, however, the situation had improved to almost normal conditions.
What will the next two months bring? Across the country, states are taking action to compel people to return to work or lose their unemployment benefits. Georgia’s order to return to work prompted Democratic state lawmakers to object to what they perceived as a scheme by the governor to shuttle workers off the state’s unemployment rolls. Ohio made this project unambiguous by setting up a web portal where employers can report employees who quit or refuse to work due to Covid-19 fears. Some people face the prospect of being forced to return to work before they even received any unemployment pay.
Adrien Love, a landlord who owns 13 single-family rental homes just outside of Orlando, Florida, worries that May will end up worse than April in part because the state has made it so difficult for people to claim assistance. Most of his tenants are gig workers, with jobs that depend on Disney World and other attractions being packed with happy tourists. Even as much of the state is reopening this weekend — but not Disney — some of his tenants haven’t seen any state or federal relief whatsoever.
Love says he’s working with his tenants but that he’s worried about his maintenance costs. “It’s starting to get hot here. If an AC unit goes down in Florida, it’s not like in San Diego. You can’t just open the windows,” he says. “The economy can’t get better if the landlords don’t get paid. We’ll end up with a dilapidated housing market.”
Momentum is building around a bill that would authorize $100 billion for rental aid for low-income households who are most at risk of losing their homes. California Representative Maxine Waters, Washington Representative Denny Heck, and Ohio Senator Sherrod Brown formally introduced the Emergency Rental Assistance and Rental Market Stabilization Act on Friday. So far, the bill has picked up 131 cosponsors in the House and 25 cosponsors in the Senate. Polling by left-leaning Data for Progress finds that 80% of voters would support a program that provides direct assistance to tenants for the duration of the emergency.
“Government officials at the federal, state, and local levels are engaged in action on a variety of fronts to address housing precarity. None are adequate,” writes Rachel D. Godsil, a professor at Rutgers Law School and director of research and co-founder for the Perception Institute, in an April paper. “Even plans with the best of intentions only defer the problem.”
The Trump administration, however, is pledging that no more federal pandemic assistance is coming any time soon. The $600-per-week federal boost to unemployment benefits expires in July, which means that in August many workers who are fortunate to receive unemployment will no longer be able to afford the rent. In addition, the federal ban on evictions for properties that are federally backed lifts in July. Cities and states that have passed their own eviction moratoriums may run longer — although protections in some states are already beginning to expire.
Over the past two months, the number of confirmed coronavirus cases in the U.S. ballooned from a few thousand to nearly 1.3 million. The damage that the economy has sustained as a result is only now coming into view, even as some parts of the country hasten to reopen. The U.S. might still be in the early stages of its Covid-19 housing crisis, with stimulus and unemployment measures, along with a host of other emergency tenant protections, working to keep most households from falling into financial disaster.
Luckily, those guardrails appear to be holding. But they may not be around much longer.
“I’m leery of how quickly we’re reopening,” Love says. “The tenants and us are in it together. I’ve had some tenants who are still waiting for something to happen. April’s gone, and they’re still waiting for unemployment.”
