Nearly a third of apartment renters in the U.S. missed making April’s payment the first week of the month.
The number of tenants who missed paying their rent in the first week of the month increased by nearly 60% since the beginning of March, according to data published Wednesday by the National Multifamily Housing Council. The data show how the coronavirus and subsequent government regulations are weighing on the finances of many Americans.
“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 is 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 to the quick, proactive actions taken by NMHC members who put forward bold solutions.”
Out of 13.4 million units tracked, 31% of renters missed making April’s rent in the first week of the month, up from 19% who missed that payment in March and 18% who missed making April 2019’s payment in the first week.
Renters who made only partial payments are counted among those who paid in full during the first week. The data may wrongly count renters who used a paperless option to pay for rent among those who missed the payment.
State laws may protect many renters from eviction during the coronavirus pandemic. Congress passed and President Trump signed a $2 trillion coronavirus relief bill on March 27 that includes payments of $1,200 for most Americans making under $100,000 a year. While the payments will help people pay bills such as rent, recipients will likely wait weeks before their check arrives.
Financial and real estate experts worry that the shock of hundreds of thousands more people missing rent payments could collapse the commercial-mortgage market and set off waves of aftershocks throughout the economy. Tom Barrack, chairman and chief executive officer of Colony Capital Inc., warned last month that the U.S. could be on the verge of an economic crisis worse than the Great Depression.
“To keep people employed, you have to support the employers,” Barrack told Bloomberg. “The biggest part of employer expense is rent. When commerce stops and they can’t pay rent and they can’t pay interest on the debt, and then the banks and the intermediaries can’t pay their investors, it all collapses.”
Barracks offered several proposals to blunt the impact of the coronavirus and virus-related government shutdowns on the economy. The real estate investor said the federal government should infuse $500 billion into the financial system while suspending and postponing certain regulations on lenders.
On April 2, the Department of Labor announced “the highest level” of jobless claims in United States’ history. About 6.6 million people had filed for unemployment insurance in the past week, roughly double the record-setting number from a week before. Over the course of two weeks, nearly 10 million people lost their jobs because of the coronavirus and emergency shut down orders across states.
Small business optimism has fallen drastically because of the coronavirus, according to the Washington Examiner. The Small Business Optimism Trends Index of the National Federation of Independent Business fell 8.1 points last month to 96.4, the largest monthly drop since the index began recording monthly data in 1986.
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