Information is power. At Spinnaker Property Management, I try to read everything and pass on the best information to our partners. Below is a brief summary of a great article I just read that systematically and statistically looked at the past six months of COVID. Sure, some of the conclusions seem obvious, but knowing the cold-hard facts is the first step toward making informed decisions.
The Avail Group conducted a nationwide survey in August. This robust survey has produced some excellent content that I will summarize here. I heartily recommend reading the whole study and have placed the link here.
In reading the entire survey, you will be able to review the demographic information and see more of the raw data they culled. For now, I will go through some of the highlights.
31% of renters were NOT able to pay full rent in August.
When COVID hit hardest in March through May, the number of renters who could not pay rose a staggering 93%! This has created a great deal of pressure on landlords.
Both Renters and Landlords are struggling to make ends meet.
This reality was especially difficult for those paying over 30% of their income on rent alone.
Both Renters and Landlords are accessing saving to make payments.
The survey also noted that borrowing from friends and families has increased as well. The Government aid also tracked on the survey as well as finding additional sources of income. Of the landlords surveyed, 21% said they were offering rent payment plans or some deferment option.
Rent payment plans are popular with renters.
Almost 40% of landlords offered deferment plans, but over 61% did not provide a payment plan. Of those who did give the option, over 60% of renters took them up on the offer. Just over 30% of landlords offered discounts on one or more months of rent.
Landlords are unsure about their future.
A staggering 12% of landlords have gone into forbearance on at least one mortgaged property. This amount is double the standard number. For those who own more than one mortgage property, that number jumped to 15%. Non-government mortgages may not have a forbearance option.
Landlords prepare for three more tough months.
Over half of the landlords see this trend continuing for the next quarter.
Both renters and landlords are concerned with their future.
The fear of eviction for renters and foreclosure for owners is very real. Both groups see government intervention as both a hope and a fear. Landlords are feeling the pinch since government intervention has laid the bulk of the loss on the landlord.
The best quote from the article came from an unnamed landlord from Maryland who said, ‘It is unsustainable to allow the tenant to not pay but require a landlord to pay a mortgage due.’
I again would recommend you read the full article linked here.
These fears are similar to those experienced during the Great Recession of 2008, though at a much more startling pace. According to a testimony by Edward DeMarco, it took six years for forbearance rates to reach their peak during the recession, but it only took two months to reach a forbearance rate of 9% during the Covid-19 pandemic. The struggles that renters and landlords are facing are very real during these times and at a pace which is hard to manage.
Read Edward DeMarco’s full testimony here.
While most of this information may seem obvious, it is comforting to know that we share the same difficulties and see the statistics to validate.
These are difficult times, but there are resources to help you pay rent!
The availability of resources to renters in the South Sound is abundant. On Spinnaker’s website, you can find a section completely dedicated to resources for tenants. There is a total of 23 links to local agencies and nonprofits with available funds.
Find these useful resources here.
When asked about the response to tenants seeking assistance, Holly Gary, Operations Manager for Spinnaker, responded with, “There are tons of resources available; renters just need to be diligent in seeking them out, completing all the required applications and following up. Tenants have been able to in some cases access funds covering up to three months’ rent from multiple agencies covering rent from April to December of this year.”
Holly went off to advice, “The resources are out there! Communication is key, and Spinnaker can guide the way and even help with filling out the necessary paperwork.”
Please call Spinnaker Property Management if you want any advice on how to handle this unprecedented situation.