ECONOMY
Are Seasonal Rent Declines More Than Just Seasonal This Time ?
BY RON THROUPE
A
return this fall and early winter of surges in COVID-19 reported cases along with civil unrest in some markets during the summer of 2020 may have long term effects on housing choices , work location , and remote work , that are still playing out . We can attempt to monitor effects of location choice and desired changes .
The economic rent ( which includes vacancy and non-payment ) associated with unenforced eviction along with the turnover ratio can give clues . The recent change of Presidents may eventually have policy changes affecting rent evictions , non-payments and potential payback of foregone rents . For this year the rent turnover continues to trend lower indicating people are not moving out of units as much as in previous years . At least not yet or have they simply delayed moving ?
Figure 1
As part of a continued survey of COVID-19 effects , the participants for this quarter were again asked about the delinquency patterns for this reports ’ time period . We then added the prior surveys to examine if any trends emerge . The results continue to show that the amount of non-payment remains low , with the majority of respondents saying their results show less than 5 % of tenants not paying and not evicted .
There is some erosion of percentage of those paying rent as we move to the fall as the number communities experiencing a 5-9.99 % of non-payment once again increased after a pause in the summer . A further erosion of rent payment next quarter would indicate that job loss , reduced work , or other COVID-19 effects may be reaching a decision point for economic recovery . Likewise , a flattening of rent nonpayment would indicate an economic recovery may be starting . ( figure 1 )
The CARES act provisions along with state initiatives on eviction moratoriums continue , but with modifications such as a need to prove hardship for eviction exclusion , not just claim so . Figure 2 shows the results of a survey question related to proving hardship for rent relief , which was part of the CARES act revisions this past summer .
As the COVID-19 pandemic continues and government relief programs extensions are modified , future rent programs and payment variations may appear .
Ron Throupe is an associate professor at the Burns School of Real Estate and Construction Management , Daniels College of Business . and researcher of the Metro Denver Vacancy and Rent Report
Figure 2 www . aamdhq . org FEBRUARY 2021 TRENDS | 33