With so many people out of work, there was a steep jump in renters not paying on time, a trade group says.
About a third of renters did not pay on time this month as business closures put millions of people out of work.
The National Multifamily Housing Council says 31% of renters didn’t make their payment in the first week of April.
Normally, about 20% of people don’t pay their rent on time.
“If the rent payments drop off significantly, they won’t be able to pay their staffs, they won’t be able to pay their mortgages, they won’t be able to pay their utilities,” Bibby says.
“I just see this cascading out throughout the whole system and just exacerbating the unemployment problem and the dislocation problem,” he adds.
Bibby says the biggest, strongest players in the rental apartment industry should be OK. They have cash reserves and various ways to access money if they need it during the crisis.
But he says rental housing is a very fragmented industry with large portion of the units owned by small businesses with 50 to 100 units. He says they could be in much bigger trouble. There are also many mom-and-pop landlords who only own a few units.
“If an apartment owner has to shut down a 50-unit building, those people have to find shelter somewhere else,” Bibby says. That’s what “worries me the most,” he says.
“I don’t understand why we think that somehow tenants are going to be able to make their payments on time when we don’t expect that of anybody else right now,” Roller adds.
He notes that the CARES Act allows homeowners to defer mortgage payments. So, he says, Congress realized that “homeowners are going to need some help to survive this.