One-third of renters in America were unable to pay their April rent, bringing to light the scope of the economic impact that the Coronavirus is taking on the average American. Data released by the National Multifamily Housing Council and a consortium of real-estate data providers are scheduled to issue a report on Wednesday regarding the toll that the Coronavirus has had on the economy.
Only sixty-nine percent of tenants paid their rent between April 1st-5th, compared with eighty-one percent in the first week of March and eighty-two percent in April 2019. The count includes renters who only made partial payments. Regardless, some tenants will be protected, temporarily, from eviction by a patchwork of federal and local laws.
However, the crisis will impact not only the tenant but also the loan servicers as well in the coming months. Some real-estate operators and analysts have expressed concern that unpaid rent could set off a chain of events that first cause commercial mortgage defaults, zapping investments in bonds backed by those mortgages.
The federal government has agreed to let apartment building owners with government-backed mortgages defer their mortgage payments, and the Federal Reserve also said it would buy up bonds tied to individual multi-family loans.
However, those measures don’t cover loans held by banks without a government guarantee. Less than one-third of U.S rental units are federally financed and covered by protections in last month’s stimulus package.
In addition to the data released by the NMHC regarding unpaid rent, another report details that more than fifty-percent of construction on multi-family housing units has been delayed.
Fifty-five percent of firms with ongoing projects said they were already facing delays when surveyed between March 27 and April. As yet, 42% of construction firms surveyed report no delays, with 3% offering no opinion, according to the NMHC, which surveyed 135 companies.
The scope of the economic impact has yet to be fully identified; however, the delays regarding construction is similar to what was witnessed during the 2008 financial crisis, according to a Q&A with Paula Cino, vice president of construction, development and land use policy, and Caitlin Walter, vice president of research, about the survey and what might be ahead for the multi-family construction landscape.
Colin Dunn. “NMHC Rent Payment Tracker Finds 12 Percentage Point Decrease in Share of Apartment Households that Paid Rent by April 5.” Daily Journal. . (2020): . .
Will Parker. “Nearly a Third of U.S. Apartment Renters Didn’t Pay April Rent.” Wall Street Journal. . (2020): . .
Keith Loria. “COVID Survey: Q&A With NMHC on “Off the Charts” Concerns .” Commercial Observer. . (2020): . .
Dees Stribling. “Delays Hit More Than 50% Of Apartment Construction Firms.” BisNow. . (2020): . .