May is shaping up as a clash between renters and landlords, as soaring unemployment could leave millions of tenants unable to pay, and some organizers of rent strikes urge even those with means to hold back.
April rent payments turned out better than expected, landlord representatives said. With the economy still strong in the first half of March—before the worst hit from the coronavirus pandemic—about 9 in 10 renters in professionally managed apartments paid at least some of their April rent, according to the National Multifamily Housing Council, a landlord trade group.
Now, rent for May is coming due after millions of Americans have been unemployed for weeks. Many more are worried about keeping their jobs, and housing activists in at least 15 cities, including New York and Chicago, are organizing rent strikes. They are calling on tenants to withhold May payments in hopes of provoking federal and state lawmakers to provide more financial support for renters.
“I am concerned,” said John Ragsdale, who owns four rental houses in Newton, N.J. He said he hadn’t heard from most of his tenants about May rent as of April 30. “Nobody’s said they’re not going to be ready, but I won’t know really until I show up” to collect rent on May 1.
Other landlords and their lenders say they are worried that unpaid rent in May could be worse than it was in April, with the organized strikes on some of their minds.
“We thought [unpaid rent] stabilized, but then who knows if everyone’s going to go on a rent strike,” Joseph DePaolo, the head of Signature Bank, a prominent lender to multifamily landlords in New York, said on an April 23 earnings call. “We don’t believe that most people want to do that. So it’s hard to say if it’s going to move up or down any further.”
The best estimates of how many people fail to pay on time this month won’t be available for at least a week, but early polls suggest that many Americans are unsure they can pay in full.
A survey of 25,000 renters by real-estate research firm Kingsley Associates and listings website Apartments.com this week found that barely half of renters said they were confident they could pay their entire May rent. Nearly 70% said they had paid their April rent in full.
National real estate trade groups have recommended landlords create payment plans for struggling tenants. Renter households had a median income of $40,500 in 2018, according to the Census Bureau, compared with $78,000 for owner households.
Before the pandemic, nearly half of the roughly 44 million U.S. renters were paying 30% or more of their income on rent and utilities, according to the Harvard Joint Center for Housing Studies.
The federal government is sending out stimulus payments to Americans. Those payouts are helpful for renters but not sufficient, advocates say, especially in cities where median monthly rents exceed the maximum $1,200 stimulus payment. Unemployment insurance payments were also expanded in the stimulus, but many state governments report their unemployment systems are overwhelmed and payments are delayed.
Renters who are facing hardships could be at risk of eventual eviction if they don’t pay rent every month, unless they can individually negotiate payment plans or get temporary forgiveness from their landlords. Unpaid rent is one of the most common causes of eviction.
The federal stimulus law halted evictions for 120 days for renters who live in properties financed by federally backed mortgages. At least 28% of rental properties in the U.S. are estimated to fall under these rules, according to the Urban Institute.
The stimulus package that Congress passed in March allows homeowners with federally backed loans who are facing financial hardship due to the pandemic to defer monthly mortgage payments for up to a year, a process called forbearance. In contrast, eviction moratoria typically don’t defer the requirement to pay rent.
“What we’re offering renters is a lot less than what we’re offering homeowners, because we’re not offering them help paying their rent,” said Laurie Goodman, co-director of the Urban Institute’s Housing Finance Policy Center.
About 40 states have enacted a full or partial statewide moratorium on evictions, according to Emily Benfer, director of Columbia Law School’s Health Justice Advocacy Clinic. In two states—Idaho and Kansas—the moratoria are set to expire May 1, and another 10 statewide moratoria are set to expire by the end of May, she said.
Some Democrats in the House of Representatives, as well as in state and local legislatures, have called for “canceling rent” in solidarity with the rent strike movement.
“We need to make sure that we’re taking very clear federal action to suspend both mortgage and rent payments in this time,” New York Rep. Alexandria Ocasio-Cortez said during a live event on Facebook this week.