In this week’s COVID-19 digest, we see how May rent payments stack up against last month and last year; a new bill that aims to bring much-needed aid to renters and rental owners; how leasing demand is faring across different property types; why higher retention rates are leading to lower rental revenue; and where eviction moratoriums have been extended so far.
Headlines: May Rents, the HEROES Act, Sky-High Retention Rates, Leasing Demand & More
87.7% of residents paid their rent by May 13. The number of rent payments rose by 7.5 percentage points over the last week, putting payments nearly 3 percentage points ahead of the rate we’d reached by this time last month, and only 2 points behind May 2019’s payment rate. However, incomplete rent payments are on the rise; and rents have fallen behind in Class C properties and in metros hit hard by the virus and layoffs, including New York City, Las Vegas, and New Orleans.
36.5 million Americans are out of work as a result of the pandemic. This unprecedented rise in unemployment has prompted many to ask: How is the rent getting paid? With the need for a stable place to live becoming even more crucial during shelter-in-place orders, residents likely cobbled together stimulus checks, unemployment insurance, savings, and credit lines to make the rent. Though expanded unemployment payments and the CARES Act stimulus seem to be doing their job in offsetting lost income so far, these initial aid programs will soon run out of steam if Congress doesn’t step in to extend them.
$100 billion in rental assistance came before the House on Friday as part of the HEROES Act. The $3 trillion relief bill also includes $75 billion in mortgage relief; $1 trillion to help local and state governments continue to fight COVID-19; updates to the Paycheck Protection Program; a second round of stimulus payments; and extended unemployment benefits. Though the future of the bill is uncertain, industry organizations have repeatedly asked for relief for renters and rental owners; and Federal Reserve Chairman Jerome Powell urged Congress this week to provide additional relief to all Americans.
Leasing demand has returned in full force—for now. Traffic to property websites saw year-over-year growth of 10% in recent weeks; though RealPage’s economists speculate that this growth represents pent-up demand that won’t continue at this rate for long. Class C properties are seeing an uptick in leasing; while Class B is breaking even on leasing volume. However, lease signings are down by nearly 10% in Class A properties, with renters likely hesitant to commit to paying high rents in a time when many are concerned about losing their jobs.
Retention rates hit an all-time high of 57.9% in April, surpassing the previous record of 55.3% in February 2019. Widespread financial difficulties and fears of relocating during the pandemic are keeping renters in their current units, particularly those that are lower-priced. However, the average length of renewed leases has dropped to 11.3 months—falling below the standard 12-month lease. Why is this the case? Property managers are allowing renters to extend leases on a short-term basis or shift to month-to-month leases as they wait out the virus. With many property managers keeping rents flat for renewals (even short-term extensions), rent revenues are growing at the slowest pace in almost a decade.
Eviction moratoriums have been extended to August 20 in New York; to June 30 in Los Angeles County; and to June 2 in Florida, where overburdened unemployment systems have prevented some residents from receiving aid.
This Week’s Best COVID-19 Resources for Property Managers
- COVID-19: Impact on May Rent Payments, Leasing Traffic & More (RealPage)
- We Are Essential: 3 Property Managers Talk COVID-19 [Panel] (Buildium)
- Why It’s Critical to Recession-Proof Properties After COVID-19 (Multi-Housing News)
- Reopening Resources (National Multifamily Housing Council)
- Ready to Reopen: A Playbook for Your Small Business (U.S. Chamber of Commerce)
- Emergency Rent Assistance Programs: Cities & States Supporting Renters During COVID-19 (LeaseLock)
- Leading Through Crisis: How to Treat Your Employees While Navigating a Pandemic (National Apartment Association)