If you decided not to pay rent in April 2020, you are in good company. About 31% of renters did not pay on time, according to the National Multifamily Housing Council. Clearly this is a time of financial hardship for many, and governors everywhere have announced a halting of foreclosures and evictions.
Ignore The Headlines – Bad But Not So Bad
So far, all of the headlines have said 1/3 of America is not paying their rent. That sounds horrible, but that’s the problem with sensational headlines. Everyone reads it and assumes we dropped instantly from 100% of people paying rent to every third household becoming deadbeats. It’s not true.
Just the month prior, for rent due March 1st, prior to almost all of the USA Covid-19 spread, only 81% of households paid their rent on time according to the same data source, the NMHC. And that was the month following all-time highs for the economy on many fronts (record low unemployment with record high stock markets).
It also helps to look at one year prior, where 82% of households paid rent on time. So 81% to 69% is the number. Yes, it’s a big blow to landlords. An increase from the usual 19% delinquent renters to 31%. More than a 50% increase in late or unpaid rent. But it’s not the mass wave of deadbeats suggested, where an apartment complex has 300 paying tenants and suddenly 100 of them stop.
Any Data Bias?
We are always mindful of any strange bias sources in the data. The 69% number comes from rent-collection and property management software such as Yardi / Appfolio. Who uses these? Mostly large, multi-family property managers who own big apartments complexes. There is a large number of tenant and landlord relationships that use more old-fashioned methods: the monthly check, or monthly cash payment.
Whether or not smaller landlords will see better payment patterns in unclear, but I would lean towards slightly better than the 69%. The relationship is more personal than a big, faceless company, and unfortunately collections is probably more stringent, with tenant rights not always respected.