The day has arrived: It’s May 1, and property managers and landlords across the country are holding their breath as rent payments begin to trickle in. It’s too soon to tell how many residents will be able to pay their rent this month. However, we do know that though rents largely got paid by the end of April, unemployment rates have continued their relentless rise, threatening the financial health of more than 30 million Americans and their families since the pandemic began.
In this week’s COVID-19 digest, we’ll talk about how many residents paid rent or sought property managers’ assistance in April; which payment plans will be most popular heading into May; and how many Americans may have lost their jobs so far. In addition, we’ll examine how lease signings and rent growth have held up in comparison with 2019’s rates.
Headlines: April Rents in Retrospect; Plus, Payment Plans, Unemployment Rates, Leasing Demand & Rent Growth
Rent payments reached 92% by April 26—just 4 percentage points lower than the same date in 2019. Many had expected last month’s rents to show the impact of rising unemployment right away. However, the vast majority of residents paid their rent last month, even in cities with a high number of impacted workers: The lowest payment rates in the country were 81.6% in New York City, 82.8% in New Orleans, and 86.8% in Las Vegas.
Less than 5% of residents took advantage of flexible payment plans in April, according to property managers polled by RealPage. The most common plan structures involve flexible or deferred rent payments, which allow residents to make a partial payment when rent is due, then spread the remaining balance over the coming weeks or months as they receive paychecks or unemployment assistance. To make ends meet in April, residents likely cobbled together stimulus checks, unemployment insurance, savings, and credit lines; but with some having exhausted their resources, the real impact of mass unemployment could begin to show in May.
30.3 million Americans have filed for unemployment in just 6 weeks. An additional 12 million workers may have lost their jobs, with overloaded systems preventing some workers from filing or receiving benefits in many states. The final numbers for April could reveal that as many as 1 in 5 workers are out of work—twice the rate that we saw during the worst month of the Great Recession.
New lease signings nearly reached 2019 levels this week. Lease signings actually exceeded last year’s numbers in the Southeast region and in Class C properties. However, they remain suppressed in the Northeast region and in Class A properties, though these numbers have improved week over week. Meanwhile, the number of renters who rescinded their plans to move out grew by 20% year-over-year, helping to keep units full even in buildings seeing subdued leasing demand.
Rents on new leases remain 4.5% lower than in 2019, with prices falling most among Class A properties as they compete for a limited supply of affluent renters. Rents decreased by an average of 2 to 6% over the last week, while Seattle, Detroit, and Virginia Beach/Norfolk saw prices cut by 10 to 12%.
This Week’s Best COVID-19 Resources for Property Managers:
- COVID-19: Impact on Payments (RealPage)
- Rent Collection and Expense Management FAQs During COVID-19 (Multi-Housing News)
- COVID-19 and Changing Eviction Policies Around the Nation (The Eviction Lab at Princeton University)
- The Federal Reserve Just Expanded a $600B Program to More Small Businesses: Here’s What You Need to Know (The Business Journals)
- COVID-19: Impact on Resident Engagement (RealPage)
- An Epidemiologist on What Steps to Take If You Are Preparing to Reopen Your Business (Fast Company)
- Banks’ Revamped Outlook on Multifamily Lending (Multi-Housing News)
- Replenished Paycheck Protection Program Faces Same Challenges (National Apartment Association)