The Strain on Apartment Renters Intensifies as Pandemic Wears On

The strain on apartment renters is increasing as the pandemic continues. Research from Apartment List found that more than 30% of apartment renters in the US owed back rent payment in September. The number was nearly unchanged compared from August. About half of renters owe less than $1,000 and only 5% owe more than $2,000; however, the report suggests that another round of stimulus checks would be helpful if not necessary to help renters settled these debts and to help landlords recoup losses.

Back rent debts remained stable from August to September, suggesting that renters are working toward making full rent payments, but are struggling to repay past rent. Landlords are also reporting that tenants are actively looking for ways to settle the debt, either through a repayment plan or alternative lease structure. In many cases, this also includes a lease renewal, which will help landlords maintain occupancy. Apartment List data shows that two-in-three tenants have requested a lease renewal and three-in-four tenants have reached a re-payment agreement. Landlords are also meeting tenants part way. Only one-in-four tenants requests to reach an agreement have been denied.

Unfortunately, rent debt issues are the most severe among minority groups. The Apartment List report found that 48% of Hispanic renters have accrued rent debt, 41% of Black renters have accrued rent debt and 35% of Asian renters have accrued rent debt. All of these group individually have a greater rent debt proportion than the overall rate of 31%. By comparison, only 24% of white renters have accrued rent debt.

Black and Hispanic demographic groups are more likely to rent than other demographic groups. In September, rent payment issues have not gotten easier. 43% of both Black and Hispanic reported missing a rent payment the first week of September. By comparison, 25% of white renters have missed a payment in the first week of September, and 30% of Asian renters have missed a payment in the first week of September.

To keep up with rent payments, renters have made significant sacrifices or lean on family or friends. The report found that 40% of renters with unpaid rent have borrowed money from family or friends, compared to 25% of renters with on time rent payments. Other renters have had to make significant financial sacrifices to keep up with rent payments, including selling personal assets, accumulating credit card debt and withdrawing from a retirement account. Both renters with unpaid rent debt and those up-to-date on rent payments have made these financial sacrifices, although they are more prevalent among renters with unpaid rent debt. In addition 36% of all renters have borrowed from a personal savings account to make rent payments during the pandemic.

Rent collections overall are down. The number of households paying rent through August 27 was 92.1%, down from 93.3% in July and 94.2% in June, according to the National Multifamily Housing Council’s Rent Payment Tracker. September rent collections are likely to follow this downward trend.

About Real Estate Intelligent Marketing (REIM):
REI Marketing is an innovative Real Estate Marketing Company that offers distinctive real estate services to developers and multifamily investors.  We are a vibrant, dedicated team of industry professionals with international experience in marketing and multifamily investment.