Dissecting this year’s hottest housing metric
While the daily COVID-19 case counts may win the prize for most-anticipated dataset of the year, we’ve also noticed our industry paying close attention to a downstream indicator: the number of Americans who missed a rent payment this month. So who’s tracking this information and what’s the source?
The most-cited source is likely the National Multifamily Housing Council (NMHC) and its Rent Payment Tracker. Since the beginning of April, NMHC has published the percent of renters paying rent on time, in full or partially and any negotiated repayment arrangements.
So far, the data has been surprisingly positive — 91.3% of apartment households made a full or partial rent payment by July 20 in a nationwide survey of 11.1 million professionally managed units. This is about 2 percentage points less than this time last year. It is also slightly lower than June 2020, but higher than April and May.
Where do these numbers come from?
The NMHC data is derived from professionally managed rental units. By aggregating data from five well-known property management software platforms, NMHC publishes real-time results on the financial health of this portfolio and, by extension, the financial health of residents.
But how complete is this dataset? The units included amount to about 23% of the nation’s total rental stock. And, because they are all professionally managed, some speculate this dataset skews toward high-end rentals with high-income tenants. The data does not include single-family rentals, small self-managed portfolios (which account for the majority of rental units in the country) or any subsidized housing.
Watch closely in the next few weeks.
With these caveats in mind, the dataset can still be a critical indicator during these troubled economic times. Analysts particularly appreciate the inclusion of both full and partial rent payments made, although it is not broken down. Partial payments and late payments (typically after the 5th of the month) are important early warning signs that a household may be facing a more significant economic hardship — and, eventually, eviction.
The next several weeks will likely be the most telling test of this dataset, as increases in unemployment payments are set to expire. The most recent Census Housing Pulse Survey shows that about 49% of renters in Virginia have used stimulus and/or unemployment insurance in the last 7 days to meet their needs. As we learned last week, this challenge will disproportionately impact and expand housing instability in communities of color throughout the state.