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MAKING ENDS MEET

Even with pandemic aid, more US renters aren’t able to pay on time

windows from three stories of an apartment building with light brown brick. Hanging from one window is a white sign with red lettering that reads NO JOB NO RENT
REUTERS/Tom Brenner
It got a lot harder for many Americans to make rent during the pandemic.
  • Camille Squires
By Camille Squires

Cities reporter

Published

In December, hundreds of thousands of Americans weren’t able to pay their rent on time.  Data compiled by the National Multifamily Housing Council (NMHC) shows that last December only 92% of households paid their rent on time compared to 98% in April of 2019.

The number of renters paying on time each month has trended down since at least April of 2019, preceding the pandemic, but the economic hardships from lockdowns have only accelerated it. Lost jobs and income during the early months of the covid-19 pandemic meant many renters were suddenly unable to make ends meet. Even as rents began climbing again in 2021—median rents are up nearly 15% around the country— millions of US renters were still out of work.

The federal government has stepped in to help, first with eviction moratoriums to keep people in their homes, then with various types of financial assistance including stimulus payments, extended unemployment insurance, and rent relief. But a recent dataset shows that even with significant federal assistance, the pandemic has taken an economic toll on many US renters.

NMHC, a non-profit trade organization for the apartment industry, began collecting information on rent payments in April of 2020 to measure the impact of Covid-19 on rental markets. The data comes from online payment platforms used by several professionally managed building companies, but doesn’t capture households paying rent to “mom-and-pop” landlords, student housing,  or subsidized low-income housing.

Still, it offers a view of how 11.5 million apartment dwellers have managed rent payments. Higher rent prices and tight supply mean these issues aren’t likely to subside in 2022 without the construction of more rental units.

Paying rent in a pandemic

Even amid the challenges of the pandemic, the vast majority of households paid their rent within the same month it was due. More than 70% of households had paid by the end of the first week, and more than 90% of households paid by the end of the month, during the tracked period. The data include partial payments, explains Caitlin Walter, NMHC’s VP for research.  Although most payments represent the full amount, some landlords changed their policies to be more flexible during the pandemic.

The federal assistance appeared to help. When people had extra money in the form of government economic stimulus payments, many put it towards rent. The on-time payment rate increased in March 2020  with the disbursement of $1,200 stimulus checks as part of the CARES Act, and again a year later, when people received another $1,400 as part of the American Rescue Plan Act. Overall, roughly 225,000 more households paid in these months with stimulus checks compared to the previous month. On-time rent payments didn’t seem to respond directly to the smaller payment of $600 sent out in late December of 2020.

In April of 2021, the federal government began sending out the first allotments of $47 billion in additional emergency rental assistance for renters who demonstrated an inability to pay. This long-awaited funding was slow to roll out as states and cities struggled to set up programs to connect the people most in need with the money.

By Nov. 30, 2021, the federal government had distributed more than a third of its rental assistance to local governments reporting that 3 million households had been served. Given. the slow rollout, the impact of this assistance isn’t as apparent in the rent payment data, but Walter notes that it still made a difference in people’s ability to pay. “If we hadn’t had the federal assistance, I’m confident the rent payment tracker would not look the way it does,” says Walter.

Facing a future of rent increases

Most renters’ economic prospects may have brightened (employment is close to pre-pandemic levels at 4%), but fundamental issues that make renting tougher remain. For one thing, rents have gone way up just as government assistance has largely dried up. The national median asking rent across the US was $1,594, a 13.5% from the previous year, according to one estimate of 127 markets from real estate data platform Yardi Matrix.

Vacancy rates—the number of apartments in a given market that are available for rent and not occupied—are also down: 97.4% of professionally-managed apartments were occupied at the end of 2021, according to data from RealPage. This means that many people are renewing their leases and choosing not to move. That drives up prices and reduces options in the rental market.

In many markets, rental demand now outstrips supply. As in the home market, construction has been constrained by a tight labor supply and expensive building materials. Housing market experts expect the pace of apartment construction to pick up this year. While this new supply will help alleviate high prices eventually, the effects won’t be felt soon enough to make renting more affordable in the near future.

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