In its monthly survey of 11.4 million apartment households, the National Multifamily Housing Council found that 92.1% of rents were fully or partially paid by August 27, marking the fifth month of strong rent collections despite the historic financial disruption caused by the COVID-19 pandemic. The rent collections rate for August was just a 1.2-percentage point decline from the same time in July, and a 1.9-percentage point drop from the same period in August 2019.
From April through July, the multifamily industry has been resilient as at least 91% of rents were consistently collected each month, even though more than 20 million people were unemployed or furloughed. This resiliency was assisted in large part by the federal government’s Coronavirus Aid, Relief, and Economic Security (CARES) Act, which provided stimulus checks to citizens and additional unemployment insurance funds.
With several months having transpired since the federal stimulus checks were initially distributed and the CARES Act’s additional unemployment benefits having expired in late July, experts believed that there would be a decline in August rent collections. However, residents continued to pay their rents at strong levels in August as the economy started to see some signs of improvement and workers are being rehired at a historic pace.
To help further alleviate continued financial stress, President Donald Trump signed an executive order on August 8 that extended the bonus unemployment insurance benefits up to $400, and recently the Trump administration announced a nationwide ban on residential evictions for nonpayment of rent for certain individuals through the end of the year.
Additionally, the federal government is still deliberating a follow up to the CARES Act, which may bring further financial relief to many tenants in the form of stimulus checks, allowing people to meet their financial obligations.
As the economy continues to reshape itself after the financial fallout of mass business closures and historic unemployment due to the coronavirus, the long-term effects on the multifamily real estate industry are still unknown. However, rent collections consistently performing above expectations in the face of a historic economic decline should be a positive sign that the industry will continue its record of resiliency.