April is here, the rent is due, and we're getting our first look at how millions of vanishing paychecks are impacting the ability of renters to pay up across the country.
In a single month, there was a 12-percentage-point jump in the share of apartment households that didn't pay their monthly rent by April 5, the National Multifamily Housing Council (NMHC) reported April 8.
The NMHC's Rent Payment Tracker found that 69% of the 13.4 million apartment units it follows in its weekly data report paid their rent by April 5, compared with 81% by March 5 of this year and 82% by April 5 of last year.
This is after nearly 10 million Americans filed new unemployment claims in the last two weeks of March.
Most are paying their rent
While attributing the drop in rent payments to the pandemic, the trade group for the apartment management industry did see the glass as being more than half full.
"The COVID-19 outbreak has resulted in significant health and financial challenges for apartment residents and multifamily owners, operators and employees in communities across the country," NMHC president Doug Bibby said in a statement.
"However, it's important to note that a large number of residents met their obligations despite unparalleled circumstances, and we will see that figure increase over the coming weeks. That is a testament taken to the quick, proactive actions taken by NMHC members who put forward bold solutions," Bibby said.
Evictions, foreclosures, economic pressure
Cities, states, and the federal government have all stepped up to try to slow the surge of evictions and foreclosures expected to grow as joblessness explodes in an economy suddenly largely shut down. (Here's a roundup on those efforts from The Washington Post in a report published April 8.)
New York City is an epicenter of the epidemic right now, and New York Governor Andrew Cuomo has already ordered a 90-day moratorium on evictions. The City University of New York reported that in the last week of March, its research showed 44% of city residents were concerned they could not make their April rent (27%) or mortgage payment (17%).
Meanwhile, Equity Residential (NYSE: EQR), a Chicago-based investor in 306 properties with 79,065 apartments in Boston, New York, Seattle, San Francisco, Southern California, and Washington, D.C., said it had collected approximately 93% of its monthly rent as of Tuesday April 7.
"The company is working with the remainder of its residents on payment options," Equity Residential said in a press release Wednesday, April 8.
Recession-proof, but for how long?
Multifamily housing is considered relatively recession-proof because people need a place to live. But the cliff the economy just drove off may prove to be a test for renters, landlords, and the industry's financers.
"If you already have high vacancy, new leasing is going to be challenging. If you have high leverage, it's going to be difficult to service that," NMHC chairman David Schwartz said in an interview in the Financial Times.
Schwartz, chief executive of Waterton, a Chicago-based property company with a 15-state portfolio, added that some owners will have trouble if the downturn stretches into May and June.