Multi-Family Industry Predictions for Rent Collection

June 04, 2020 • Author: Howard Taylor

In April, a survey conducted by the National Association of Home Builders (NAHB), asked the multifamily industry how COVID-19 impacted their business. Results indicated that 90% of multifamily developers experienced a much longer waiting period to obtain a plan review for a typical multifamily building. The most widespread problems related to the Coronavirus were the supply of N95 respirator face masks, reduced traffic of prospective buyers/renters, and costs related to renters’ health and safety. Most significantly, 88% of NAHB members said the pandemic had an adverse effect on timely collection of rent payments.

Since then, there’s been slight improvement in rent collection. The National Multifamily Housing Council (NMHC)’s Rent Payment Tracker found 93.3 percent of apartment households made a full or partial rent payment by May 27th. This survey included 11.4 million units of professionally managed apartments across the country. The NMHC President, Doug Bibby, says that there are 43 million renter households which are showing a trend of prioritizing rent. Flexible payment plans were developed by apartment owners in response to their tenets’ economic hardships related to COVID-19 shutdowns. Bibby believes the reduction in rent delinquencies are due in great part to these flexible payment plans.

Thanks to data from the NMHC, we know how professionally managed apartments are faring, but what about the rental market as a whole? The new experimental Household Pulse Survey from the Census Bureau gives us this insight. The survey is designed to “quickly and efficiently deploy data collected on how people’s lives have been impacted by the COVID-19 pandemic”. The key metric here is the percent of adults who missed last month’s rent or mortgage payment, or who have slight or no confidence that their household can pay next month’s rent or mortgage on time.

The first week of reporting at the national level indicated 24.6% of respondents missed last month’s housing payment or had slight or no confidence they’d make next month’s payment. In week 4, we see a decrease at 23.6% lacking confidence in making a housing payment. However, housing insecurity varies substantially across the U.S. In Vermont, 11% of residents expressed concern about making housing payments while in Mississippi 34.7% of residence express concern. In Florida, nearly 30% reported housing insecurity, which is currently the fourth-highest in the nation.

The combined data from the Census Bureau and NMHC may capture a glimpse of a silver lining compared to NAHB’s April study, but these reports may not show a complete view of all the challenges related to rent payments. There may be long-term negative impacts from renters prioritizing housing payments that they can’t actually afford. Many residents are making payments by credit cards, or even taking out loans. The CARES Act, passed by congress to alleviate some of the econimic strain from the Coronavirus, prohibits rental evictions for 120 days on certain properties. What happens once that ban expires? There’s still a lot that we don’t know about the path of America’s rent crisis, or the long-term impacts on the Multi-Family Industry.

America’s 45 million renters are not totally in the clear. Citizens and building owners are looking to lawmakers to support a national rental assistance fund via the HEROES Act, and legislation that will protect housing providers with mortgage forbearance. Should this act pass into law, negative impacts on the Multi-Family industry could be slowed or greatly minimized. In the meantime, housing providers can find more information about how to request forbearance or loan relief from their servicer on the Consumer Financial Protection Bureau website.