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Census Survey Shows More Renters Not Paying Rent

April 01, 2022

Small Landlords Continue Struggling Unfairly

Today’s jobs report was a bright sign for the US economy and bolsters hopes for a continuous recovery from the pandemic recession.

Yet the CDC has just extended the US government’s eviction ban, without providing proper stimulus funding for rental apartment and rental house tenants who need help — a worrying trend for the US rental property market and millions of landlords.

Small business landlords took it on the chin during the last two years and many continue to struggle financially. Many of them are owed backrent and can’t collect on it even as tenants gain full employment. In some states the problem is severe.

Besides leaving small business landlords in dire financial circumstances, the CDC decision means more will have to sell their rental property, and that property maintenance will be neglected because landlords can’t afford to fix, maintain or renovate. They may need to sell to eager owner occupiers — not renters.

Tenants too, appear to be drowning in debt.  They may still need financial help yet the controversy is whether landlords should be generating that financial assistance. Should the government be helping more?

Trending: More Renters not Paying Rent

The drama continues this year as new data from Census.org show 17% of tenants still owe back rent.  2.3 million more people report not paying rent as compared to June of 2021.  It’s a trend with far reaching implications for the rental market.

The latest data shows 600,000 of those non paying renters reporting earn more than $50,000 per year. 1 million of those who owe rent did accept stimulus payments and 500,000 reported receiving government rental assistance.

Landlords Forced to Assume Financial Burden

While putting the burden on landlords and property owners, this will still push renters into a homeless circumstance. And it’s less likely that investors and builders will come to the rescue of a desperate rental market for renters over the next 5 years.

Perhaps the growth of the built to rent market reflects business aversion to these rental market problems stemming from eviction bans and an inability to collect rent long overdue. Bankruptcy and big losses aren’t a big drawing card for housing market investors.

CDC Extends the Eviction Ban (late rent too) to June 2022

Last Monday, the Centers for Disease Control and Prevention extended the eviction ban until the end of June, 2022.
Unfortunately, too many small landlords cannot access Covid rental relief funds, or won’t because of unfair stipulations for both tenants and landlords (rules of the goverment’s Covid relief program).

That program has set aside more than $50 billion to help with rent relief but it’s estimated little of it has been issued. The requirements vary depending on state/local jurisdictions and the money isn’t getting delivered to those who need it.

7 months ago Bob Pinnegar, the president and CEO of the National Apartment Association (NAA) said “the backbone of the nation’s rental housing stock” is at risk with the latest eviction moratorium.  8 months later, it is yet another extension and Pinnegar says 23% of landlords have sold properties to deal with their financial situation.

 

In a new CNBC report Pinnegar reiterates on the problem: “The thing that keeps me up at night is we had a housing affordability crisis going into Covid-19. If we lose that critical naturally occurring, affordable housing that is out there across this country, we’re going to have a catastrophe on the other side of this.”

 

It might be widely believed that the tenant landlord crisis is over, however a new report has it that 15% of renter households, or 8.2 million, said they were behind on their rent.

The ratio of paid to unpaid renters went from 74:6 in June last year to 50:8 in the latest period. This means there are more non payers, and the ratio is worsening.

Census Report on Renter Household, rent payments first 2 weeks of March 2022

 


Census Report on Renter Household, rent payments last June 2021

The plight of tenants in an inflationary environment is a huge social issue that needs a solution. That solution would benefit all parties concerned and encourage investment in more rental apartments and multifamily dwellings. It would allow renters to stay in their rental units, and landlords can keep their property management teams maintaining the properties.

However, putting the burden of financing rental properties without cash flow is going to deter investment in the rental housing sector. Homelessness and affordability are not being served with these policies.

Is There a Solution for the Rent Due Problem?

The requirements for both tenants and landlords to enter into by the CDC eviction legislation needs to be removed. This is likely the number one reason funding is not forthcoming. Tenants have little to lose in not agreeing or helping themselves, as they can’t easily be evicted.

If and when evictions are resumed, there will be more legal expenses and writeoffs. Landlords just want their properties back, to service tenants and to resume their rental business. With so much stimulus money having been spent in other sectors, and a lot of stimulus funds not having been spent (i.e., rental assistance), it’s a matter of the US and state governments enacting new rules to get the funds flowing and into tenants and landlords accounts.

It’s wise for landlords to contact their congressional representatives to get the Covid rent funds flowing. Should inflation grow, and rents keeping rising at a 12% to 14% clip consistently year over year, the situation could be dire for everyone, especially renters. A recession could result in landlord bankruptcies and a further reduction in rental housing construction.

Find out more about how to encourage rent payment from tenants and discover why online rent payment is just one automation feature you must have in your property management software.

 

More Blogs:  Housing Market – Will Rents Rise or Fall? | Cloud Based Property Management Benefits | How to Evict | Eviction Documentation | Collect Rent from Tenants | Online Rent Payment Software | Home Inspection Tips | Rental Houses | Best Property Management Software | Switch Property Management Software | Landlord SoftwareProperty Management  | Forecast of Rent Prices Rising up | Property Management Conferences

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