Despite many reports of the COVID-19 pandemic causing disruptions in the multifamily market, a recent report showed optimism for industry investors. According to the report by Marcus & Millichap, which analyzed the eviction moratorium’s impact on CRE investors, rent payments have held up fairly well, with approximately 94.9 percent of Americans making rental payments as of most recent data in July of 2021.
Nationwide, the eviction moratorium has been called to halt. However, with increases in COVID-19 cases, many local and state governments have made extensions that are set to expire on Oct. 3, allowing for evictions to move forward. Marcus & Millichap reported that a mass wave of eviction is unlikely regardless of the 16 months of eviction moratoriums being in place. In fact, the report showed that rental demand has already made a drastic improvement from the year prior, with a record number of apartments absorbed in the second quarter of 2021. In June, nationwide multifamily vacancy dropped to just 3.8 percent.
Rents are also climbing, according to a mid-year multifamily outlook report, also from Marcus & Millichap. In 2021, rent in the U.S. will climb to an average $1,507 per month, the largest annual jump in rent since 1998.
According to the report, the combination of high rent and low vacancy could be partially due to nationwide unemployment rates decreasing. Currently, unemployment is at 5.4 percent, with a record 10 million jobs available nationwide. With more households finding employment, tenants are anticipated to continue making on-time rent payments and decrease overall delinquency the report found.
“This metric suggests that rent delinquency is not significantly higher than in a more traditional year. Robust federal stimulus, including expanded unemployment insurance, were key early supports when mandated closures cut numerous service-related jobs,” the report stated.
Despite these findings, others are concerned about backlogged rent not making its way to property investors. According to the National Rental Housing Council, eviction moratoriums have put both tenants and landlords across the country at risk by depriving them of payments.
While the multifamily market continues to succeed, the NRHC maintained concern for single-family landlords, with one survey showing 54 percent receiving less than full rent this year. Additionally, the NRHC reported more than 60 percent of single-family rental homeowners say that missing rent has had a negative impact on their ability to pay property and maintenance bills.
“NRHC’s position regarding the CDC eviction moratorium has been clear since the order was enacted nearly a year ago – we respect the right of the government to respond to public health emergencies as needed,” David Howard, executive director of the NRHC said. “NRHC member companies will continue working with residents experiencing financial hardship as a result of the COVID health crisis. Since the beginning of the pandemic in 2020, NRHC members have provided tens of millions of dollars in rental assistance and forgiveness and have instituted a range of programs designed to ensure residents impacted by COVID are able to remain in their homes.”
Marcus & Millichap, however, reported that government aid likely will continue to aid in rental payments moving forward, with Congress allocating close to $47 billion in rental assistance and $25 billion already having been released.
“Only a handful of states have distributed more than a third of their funds, led by Texas at just over half. Many more states have sent out less than 10 percent. When the CDC moratorium expires, however, it will still take some time for court systems to process all of the eviction proceedings. This will provide more runway for assistance to be distributed,” the report stated.