Rent Payments, Rent Strikes, & Mortgage Rates – April 2020 Multifamily News Roundup
The Biggest April 2020 Multifamily News
We have summarized multifamily news to emerge in April 2020, including rising unemployment, continued calls for rent strikes, and mortgage rates hitting record lows.
Rent Payments Exceed Expectations, Despite Unemployment
Around the country, multifamily owners eyed their calendars nervously as April 1st approached. Predictions from major publications including, the New York Times, indicated as many as 40% of renters in New York City could forego rent payments on April 1st, with similar numbers in other major markets.
Would widespread tenant insolvency force landlords into forbearance? Would a wave of non-payment force their lenders to foreclose?
For most, the answer was no to both questions. A third of renters did not make rent payments “on time” in the first week of April, but by the end of the month, approximately 89 percent of renters had paid some portion of their rent. That number differs little from the number of non-collections in March of this year. From March 1st to March 12th, approximately 91 percent of tenants had paid some portion of their rent.
Renters proved the direst predictions wrong, but the story does not end with collections in April. College students and young workers have broken leases rather than continue paying for housing they can no longer afford or need as remote classes and work continue. Unemployment claims climbed through the end of the month, reaching as high as 18.3 percent. If the number of unemployment claims rises further over the next several weeks, calendar-induced anxiety will continue past May 1st. Tenants will struggle to pay all bills, including rent, into the summer. This pain will become worse when supplementary Pandemic Unemployment Assistance ends in July.
Calls for Rent Strikes Continue
Calls for rent strikes, first initiated in March, continued through April. Mostly spurred by organizations such as Housing Justice for All and tenants’ unions, the strikes aim to incentivize local governments to extend eviction moratoriums and forgive or annul rents.
Extreme rates of unemployment have likely induced anxiety in most multifamily owners. However, resources exist to help mitigate the impact of withheld rent. Owners facing financial difficulty can take advantage of forbearance options introduced by the CARES Act for relief. Additionally, governmental for individuals may continue, whether it as a $1200 check or a more comprehensive package. Tenants will use the money to pay some portion of their rent to avoid paying a lump sum later.
Some activists have made inroads in capitol buildings, such as in New York’s, but those instances remain the exception, not the rule. Landlords also have existing relationships with state and local governments and can lobby to influence legislation before it comes to pass.
There are many tools available for those evaluating their forbearance options. redIQ has developed a simple but powerful calculator that we have made free for all clients. We are also offering a free trial to those who not currently using our software, which provides access to this free tool. To learn more, click here.
Mortgage Rates Fall, with Few Takers
At the end of April, mortgages hit a new low, with the 30-year fixed-rate average sinking to 3.23 percent. Freddie Mac, which has monitored mortgage rates since 1971, has never recorded a lower rate. The low rates may spur some activity among those interested in refinancing. New mortgage applications, however, have lagged due to uncertainty in the market and due to the inability to visit homes for sale.
Other Real Estate Stories
- As the need for office space shrinks and malls stay empty, some detect opportunities in distressed real estate funds.
- In New York, Governor Andrew Cuomo designates real estate an essential business, but showings of apartments must occur remotely.
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