Despite the fact that the economic downturn and lack of additional fiscal relief presents a disproportionate challenge for renters, monthly rental payment rates have held up fairly well to this point. A widely-cited measure of payment rates in professionally managed apartment buildings – courtesy of the National Multifamily Housing Council (NMHC) – was updated today and showed that 90% of rental households had paid at least part of their August rent as of August 20. That’s down from the year before and from July, but not nearly the precipitous fall that many had expected. But a separate report today suggests that the share of August payment rates is actually far less than the NMHC survey would indicate. According to Avail — a technology and marketing platform for small landlords – 31% of renters of single-family or multi-family rental units that are owned by individual landlords were unable to pay their August rent. In July, that rate was 25%. There are about 23 million households that rent these units, according to the Census. Absent any additional fiscal support, it’s very likely that this delinquency rate could rise much higher, affecting millions of rental households as well as the individual landlords (and the properties they own) who count on their monthly payments.
This theme of varying economic hardship faced by different groups also translates to small businesses. According to the National Federation of Independent Businesses (NFIB), just over a fifth of small business owners believe that they will have to close their business permanently if economic conditions do not improve in the next six months. An additional 19% of small businesses believe that will be the case should the economy look the same in 7-12 months as it does today. However, the current conditions are quite positive for a significant share of small businesses. According to the survey, 36% of small businesses say that sales are “nearly back” to where they were pre-pandemic, while an additional 14% saying that sales are even better than before the coronavirus arrived. Taken together, half of small businesses feel like things are about as good as before, or even better, while 40% are very concerned about even existing a year from now. The NFIB survey is just another example of the wide range of impacts felt by different groups and industries throughout the economy, and how uneven the recovery may look.
According to the Mortgage Bankers Association, the share of home loans in forbearance plans has fallen for ten consecutive weeks. Just 7.2% of loans – or about 3.6 million mortgages – were receiving forbearance assistance as of August 16. That’s a 1.35 percentage-point decline — a reduction of about 700,000 loans – since the first week of June. The still-elevated participation in these programs is the likely cause of a recent spike in serious mortgage delinquencies, a fact that reinforces the difficult financial state that the pandemic has placed millions of households in. There is a long way to go in the recovery, but the fact that the forbearance participation rates are decreasing, and that there has not yet been a resurgence following the end of extra unemployment benefits, is an encouraging sign for the housing market.
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