Market-rate rent collections have hit a three-year high while lagging behind for affordable housing.
Rent collections in February 2023 climbed to 96.03%, the highest rate since March 2020, according to RealPage.
Improving rent payments provide further evidence that market-rate renters are generally in stronger financial shape than widely believed, RealPage noted. To arrive at its figures, RealPage measures the actual share of rent paid compared to the amount due each month in millions of professionally managed apartment units.
For each month over the past three years, collections measured consistently between 94.9% to 95.8%. The February 2023 result of 96.03% marked an improvement of 0.3 percentage points since January and of 0.9 percentage points year-over- year.
Wage gains and stimulus spending appear to have offset what many feared would be a large wave of evictions due to Covid 19 and high inflation.
In market-rate apartments tracked by RealPage, household incomes among renters signing a new lease jumped 24.9% between 1st quarter 2020 and 4th quarter 2022. That was roughly in line with the increase in average new-lease asking rents (23.9%) over the same time period.
As expected, renters in the most expensive Class A apartments continued to pay rent at the highest rate, but rent collections in subsidized low-income affordable housing also showed improvement in February 2023 though not to the same degree as market-rate apartments. Collections remain below pre-pandemic norms in subsidized affordable housing, showing that low-income households are most impacted by inflation.