Affordable Rent Payments Dip While Public Housing Rises

To be sure, this economic and real estate period will have a ripple effect for many years to come but may also give some perspective for future generations of owners. When the analysis begins to roll in about the real estate market of 2020, there will be much to learn from this downturn.

One insight that has been interesting to track is the comparison of affordable housing payments versus public housing payments. In fact, MRI Software studied the impact of COVID-19 on the affordable and public housing markets in its latest report comparing trends from January through November 2019 to 2020.

There are two notable findings related to payment volumes and occupancy: affordable housing payments dipped back again below 80% of the prior year while public housing climbed back to 96%.

Affordable housing’s lowest point was recorded in July when payments were less than 80% for the first time—a trend that lasted until October when payments hit the 80% mark again. Meanwhile, public housing had been hovering around 100% since January but dipped in February, April, August and October.

At the onset of the pandemic, many observers cautioned of a catastrophic event and had dire predictions about what would happen with multifamily rents. However, rent payments have been better than most have expected, says Evan Blau, a partner at Cassin & Cassin LLP, a New York-based law firm and the leader of the firm’s agency lending and affordable housing practice. But he realizes tenants received help at the beginning of the pandemic and now that particular can has been kicked down the road.

“Obviously, we had the CARES Act (Coronavirus Aid, Relief, and Economic Security Act), which subsidized a lot of unemployed folks to some extent,” Blau notes. “The government has responded through various initiatives, like Paycheck Protection Program loans for small businesses. But those things are now starting to go away. From that perspective, I think rent collection will dip.”

Indeed, any future stimulus bills purportedly are not expected to include much if anything in the way of consumer monetary boosts. And, although the vaccine is rolling out now, it may not get into the arms of low-income renters for several more months, which could also point to rent payment lags.

Aside from rent dips and evictions, application volumes remain down across the board and the conventional, affordable and public markets seem to have settled into reduced volumes as compared to prior year. If the negative economic indicators persist, some families coping with prolonged unemployment and/or declining wages will be forced to transition from owner-occupied homes or market-rate properties to affordable properties. These potential trends could increase demand for affordable and public housing, MRI Software points out.