The COVID-19 pandemic has rattled most areas of the U.S. economy, but it may not be as bad on residential real estate property owners as many once predicted it would be.
After the coronavirus surfaced in the U.S. in March, business shutdowns and layoffs led to fears that renters would be stretched too thin, unable to make monthly payments. The federal government stepped in to help, offering a moratorium against evictions as the pandemic continued. That was good news for renters, but not necessarily for the owners of the buildings, they rented who need those monthly payments.
Now as the eviction moratorium is set to expire, some experts have warned there could be a surge in evictions from landlords who have struggled to collect rent during the virus’ ongoing surge across the country. Some real estate experts like Paul Daneshrad have cautioned that commercial real estate could continue to suffer into 2021 as the U.S. economy sputters toward the end of the year. And that’s even if the economy starts to show more signs of improvement, just given the historical lag felt by the commercial real estate after a recession.
The Wall Street Journal reported that between 2.4 million and 5 million American households are at risk of eviction in January alone, and millions more will be vulnerable in the months after, according to estimates from the investment bank and financial advisory firm Stout Risius Ross. It’s one of many predictions of financial chaos for landlords, which also have included predictions of forced bankruptcies and loss of investment property due to the missed monthly payments.
What do these dire forecasts mean for landlords who need those rent payments to stay current on their bills? Maybe not as much as once thought. A study published in Forbes magazine looked at data from more than 10,000 leases of all types from across the nation. While more landlords have been reporting that their renters are taking more time to make their monthly payments, the study also found that most of those payments are still being paid.
That’s a positive sign. Despite expectations that renters would just stop making payments because of the tough economic times, more are making those payments, albeit later, than previously thought. And at least a brief recovery from the darkest economic times experienced in the spring from COVID-19 business shutdowns has brought more people back into the workforce after the job market initially collapsed earlier this year.
It’s not clear how long that respite will last. While vaccines are rolling out in the U.S. now to combat the virus, new infections, hospitalizations and deaths continue to grow at record rates, and broad vaccinations across the country aren’t expected until spring and into the summer of 2021.
The concern over evictions has resurfaced as federal officials consider once again how to help U.S. citizens who are still reeling from the economic problems brought on by COVID-19. Congress again is considering another relief package, which could offer laid-off workers a boost in unemployment payments and an extension of the eviction moratorium passed earlier this year. President-elect Joe Biden also has said he will propose more economic relief after he takes office in January.
Many housing analysts expect the federal moratorium on evictions to be extended into 2021. And some states and cities are offering their own protections for renters. But the good news is so far, the devastation to landlords hasn’t been as bad as it could have been given the earlier scary forecasts made after the pandemic.