This week’s trends were a continuation of the last: The number of residents who were able to pay their rent by the second week of the month exceeded expectations; but so did the number of Americans who lost their jobs. New numbers from the multifamily sector are starting to show the impact of the pandemic on construction rates and leasing demand from renters. Last, two Small Business Administration programs are officially out of money as the need for assistance vastly outstrips the initial funding that Congress had set aside.
Headlines: Rent Payments, Unemployment Numbers, Multifamily Construction Rates, and SBA Funding
84% of renter households paid rent by April 12—just 7 points below March, when 91% of renters had paid by the 12th. Renters who were most impacted by layoffs in the hospitality, retail, and restaurant sectors had the most trouble paying their rent, with residents in Class C rentals and in cities like Las Vegas and New Orleans showing the biggest declines.
5,245,000 workers filed for unemployment last week. More than 22 million Americans have lost their jobs in the space of a single month. Though some received their stimulus checks this week, they’ll only go so far in helping Americans make ends meet: An analysis by Redfin found that $1,200 won’t cover one month’s housing costs for 1 in 4 renters. Average monthly rents are more than $1,200 in one-third of the cities they analyzed, from Orlando, FL ($1,217) to San Jose, CA ($2,283).
Multifamily housing starts declined by 32% in March as the pandemic caused construction delays across the country, with the virus-stricken Northeast seeing the biggest declines in building activity. At the outset of the year, 370,942 units were expected to be completed in 2020—a number that will see dramatic declines as the recession and risk of contagion slow progress on construction sites, further exacerbating the housing shortage.
The vacancy rate in new apartment buildings rose to 29.0% in Q1-2020, up from 25.7% in Q4-2019. 224,000 units across 600 new multifamily properties are ready to be leased; but with new lease signings down by 40% in the first week of April, it remains to be seen how many of these vacancies will be filled in the coming months. Another cause for concern is the share of new construction that’s unaffordable to most renters: 1 in 5 new units will rent for $2,450 or more—a price that’s becoming less attainable by the minute as unemployment rates spike.
The Paycheck Protection Program ran out of funds after approving 1,661,397 loans in 14 days amidst administrative bottlenecks and unprecedented demand. Loans that hadn’t been approved prior to Thursday morning’s shutdown won’t be considered, though some lenders are still accepting new applications in anticipation of new funding from Congress. The Economic Injury Disaster Loan program is also closed to new applications, though some businesses may be eligible for the Federal Reserve’s Main Street Lending Program.
This Week’s Best COVID-19 Resources for Property Managers
- Operating Multifamily Properties in a Time of No Evictions (National Real Estate Investor)
- Next Steps: What Owners and Operators Should Consider (National Apartment Association)
- 4 Tips for Leasing Successfully During COVID-19 (RealPage)
- How to Give Tenants a Break While Also Protecting Yourself (Inman)
- The “Downturn” Playbook – Your Questions Answered (Multifamily Insiders)
- Commercial Real Estate Trends & Outlook: April 2020 (National Association of REALTORS)