How missed rent payments could affect the affordable housing supply
Share Now on:
Christopher Wallace is still collecting this month’s rent for the hundreds of apartments his firm manages in Washington, D.C., and he isn’t optimistic.
“Since this all started in March, it’s been progressively getting a little worse,” he said.
Late or skipped payments aren’t the only problems, said Wallace, who works for Fred A. Smith Management.
“I think a lot of people, if they’re unable to pay, what they’re doing is moving out and moving either back home or moving in with other people,” he said. “We’ve seen a lot more vacancies than we normally would get this time of year.”
Most of Wallace’s buildings are known as Class C properties. They tend to be older, have fewer amenities and serve low- to moderate-income tenants. And research shows tenants in these buildings are struggling to pay the rent at much higher rates than tenants in higher-end properties.
According to the insurance company LeaseLock, by mid-July owners of Class C buildings had collected only 37% of rent, down from 54% as of mid-June.
“Those groups of people who are most affected by unemployment and layoffs — it’s the same population who are also residents of Class C apartments,” said LeaseLock’s Rochelle Bailis.
She expects the numbers will get worse this month, after Congress allowed emergency unemployment aid to expire.
When those tenants can’t pay, their landlords may have to sell or face foreclosure, said Jenny Schuetz, a fellow at the Brookings Institution. That could permanently reduce the stock of affordable housing.
Investors could swoop in, renovate and raise the rent. Or, “if the landlord isn’t collecting rent, they can’t do things like fix the plumbing and fix the roof,” she said. “Some of these buildings just may become uninhabitable.”
The need for affordable housing was already dire before this crisis, Schuetz said, and once it’s gone, it’s hard to replace.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.