The number of rent payments landlords received fell significantly during the coronavirus pandemic, including in December when payments were down 24 percent compared to March, according to a new report from rental software firm Rentec.
The report, out Tuesday, is based on rental data from 620,000 properties across the U.S. Rentec began studying the data in March, when the pandemic was first spreading in the country, and the goal was to figure out how the outbreak was impacting rental payments.
One of the more positive findings from Rentec’s report is that, ultimately, a majority of renters have continued paying their rent on time. The company also found that tenants with online payment options are more likely to turn in their rent on schedule.
However, despite those relatively upbeat findings, there is still some cause for concern.
Significantly, the report reveals that in April, the number of rent payments landlords and managers received fell by 17 percent compared to the prior month. The number of payments landlords received then kept falling all the way through September, when payments were down 35 percent compared to March. The report speculates that the September low point may be related to both politics and labor.
“The major drop in number of rent payments received in September may correlate with the labor force participation rate in the U.S. being at its lowest level since 1971, as well as changing stimulus packages and unemployment benefits,” the report explains.
The numbers recovered somewhat through the fall, but they never fully came back to pre-COVID levels.
“Since October 2020, the number of rent payments received has been slowly increasing,” the report adds, “though the December 2020 number was still 24 percent less than [the] March 2020 baseline.”
That recovery offers some cause for optimism that the U.S. rental market is moving in the direction of a recovery. However, the report also notes that there could still be trouble on the horizon.
“Eviction moratoriums are creating inflated occupancy rates, and low vacancy rates are driving up rental prices,” the report states. “This unnatural inflation of housing needs could lead to a housing market crash in 2021. When eviction moratoriums are lifted, the rental market will likely be flooded with vacancies. This could very quickly lead to a decrease in property values and rental rates.”
In other words, there are still significant unknowns on the horizon, some of which could end up causing trouble in the rental market.
Rentec’s report is just the latest evidence that the coronavirus pandemic has had a major impact on rentals. Aside from payment numbers, another report out this week from digital marketplace company Zumper showed that the crisis has sent median rents soaring in cities like Newark, New Jersey. At the same time, rents in pricey places such as New York City and San Francisco have plummeted as tenants seek out more affordable metro areas.
A report from December further showed that demand specifically for single-family rentals has remained at record highs during the pandemic.
Together, both of those reports indicate renters’ preferences regarding location and housing type have evolved significantly during the pandemic.
In any case, the new Rentec findings further show that if nothing else, this has been a tough period for renters.
“Tenants have struggled to pay rent throughout the entirety of the COVID-19 pandemic,” the report concludes, “which is not surprising considering the extensive income loss and heightened unemployment rates in the U.S. in 2020.”