As 2020 comes to a conclusion and the recent vaccine announcement sparks optimism in the market, renters are still falling behind on apartment rent payments. According to Rentec Direct, a rent collection data analyzer, rent collections were down as of December 10th by 24 percent, compared to March 2020. Despite the decrease, rent payments are still improving compared to September, October, and November where collections were down 35, 28, and 27 percent, respectively, compared to March 2020.
According to The National Multifamily Housing Council (NMHC)’s Rent Payment Tracker, 75.4 percent of apartment households in professionally managed apartment units made a full or partial rent payment as of December 6th. This reflects a 7.8 percentage decrease compared to last year and compares to 80.4 percent that paid by November 6th, 2020. Although this figure is alarming to some, NMHC President, Doug Bibby, believes Congress should consider the consequences of extending an eviction moratorium again. “The recent news that legislators in Congress may be coming closer to finding common ground is encouraging, but it is critical that any package includes meaningful rental assistance and other critical support such as an extension of unemployment benefits and short-term liability protections,” said Bibby.
Over the last six months, residents have stayed home for extended periods and operating expenses have risen ten to 15 percent. Due to COVID-19, property owners and operators have seen more frequent trash and janitorial services, increased water usage, and enhanced personal protective equipment for employees and residents. Operators will likely have to keep these expenses in mind for their 2021 budget to continue accommodating their residents and following CDC guidelines.
Class B assets are performing better than the Class C assets as blue collar workers prioritize rental payments, whether it’s by taking on another job, borrowing from family or friends, charging their credit card, or selling assets. In December, online payments increased 8.1 percent, while October and November only reported a 1.8 and 4.3 percent increase, respectively. Rentec Direct found that landlords were receiving more rent collections when renters utilized online payment options.
When the CARES Act was enacted and stimulus checks were sent out, May, June, and July all reported the best rent payment results, outperforming the national rent collection tracker. As time progressed and subsidies taper and unemployment benefits expire, rent payments reflected this. The Federal Reserve Bank of Philadelphia reported that credit card usage increased 70 percent compared to last year as people began paying rent through their credit cards. As electronic payments have increase, landlords have begun enforcing fees.
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