Apartment Owners Are Out $8B From Missed Rent Payments This Quarter

The money lost by property owners from missed rent payments is up, but the number of delinquent tenants is declining, the Mortgage Bankers Association Research Institute for Housing America reported recently.

Rental property owners lost as much as $7.85 billion in first-quarter revenue from missed rent payments up from over $7.41 billion in the fourth quarter.

At the same time, the share of renters missing payments dipped from 7.9% in December to 7.7% of renters in March.

Overall, 76.3% of renters made all their rental payments over the last 12 months, 10.7% missed one payment, 4.4% missed two payments, 2.5% missed three payments, and 6.1% missed four or more payments.

During the pandemic, 23.7% of renters have missed at least one housing payment during the pandemic, but only roughly a third as many (8.6%) have missed more than two.

According to MBA, on average, in the first quarter of 2021, 9.8% of renters received permission from their landlord to delay or reduce their monthly payment.

The near-term is looking up, MBA’s Associate Vice President, Housing Economics and RIHA Executive Director Edward Seiler said:

“The economic forecast is brightening heading into the summer. Getting closer to consistent, pre-pandemic levels of economic activity and employment will allow households the ability to resume their housing and student debt payments and pay back past-due amounts.”

Missed payments are declining as rents on multifamily units rise. In March, the average rent rose $6 to $1,407 from a year earlier, Yardi Matrix reported in April.

In another sign that could bode well for rental property owners, Apartment List’s national sentiment index climbed 1.1% in March, its largest monthly increase going back to the beginning of 2017.

However, millions of families are still facing economic distress, despite improving conditions since last March, warned Gary V. Engelhardt, Professor of Economics in the Maxwell School of Citizenship and Public Affairs at Syracuse University.

With 37.1% of borrowers having skipped more than two student loan payments, landlords are probably getting at least their (near) undivided attention.