FILE – This July 11, 2017, file photo, shows the skyline beyond a row of Victorian houses in San Francisco. A San Francisco couple has agreed to a $2.25 million legal settlement to the city for illegally renting out 14 apartments as Airbnb units. The San Francisco Chronicle reported Monday, Nov. 5, 2018, that a couple has agreed to pay the sum as penalties and investigation costs. San Francisco requires people renting their homes through sites like Airbnb to live in them at least 275 nights a year and rent them no more than 90 days during that time. (AP Photo/Eric Risberg, File)
So what’s the economic impact of this ongoing shutdown?
Well, it isn’t good.
According to a report by the National Multifamily Housing Council, the number of tenants missing the first-week-of-the-month’s rent payment increased frightfully between March and April.
In fact, purportedly, nearly a third of American apartment renters missed ponying up cash for April’s first week.
NMHC President Doug Bibby cited the toll of our present pandemic, which has put many out of work:
“The COVID-19 outbreak has resulted in significant health and financial challenges for apartment residents and multifamily owners, operators and employees in communities across the country.”
Even so, he believes we’re soon to be on the uptick:
“However, it is important to note that a large number of residents met their obligations despite unparalleled circumstances, and we will see that figure increase over the coming weeks. That is a testament to the quick, proactive actions taken by NMHC members who put forward bold solutions.”
Here’s a bit of a breakdown:
Of 13.4 million residential units tracked by the NMHC, 31% of renters missed April’s first week. That’s quite a leap from the 19% who came up short the first week of March. By comparison, the first week of April 2019 saw 18%.
And to be clear, in the study, anyone who made even a partial payment during April’s first week was counted among those who paid in full.
However, anyone using a paperless option may have wrongly registered as having not paid.
So what’s the effect of all the missed rent? Homelessness?
As noted by The Daily Wire, there are protections in place:
State laws may protect many renters from eviction during the coronavirus pandemic. Congress passed and President Trump signed a $2 trillion coronavirus relief bill on March 27 that includes payments of $1,200 for most Americans making under $100,000 a year.
While the payments will help people pay bills such as rent, recipients will likely wait weeks before their check arrives.
And what about mortgages on the buildings being rented? And what if the problem continues?
More from TDW:
Financial and real estate experts worry that the shock of hundreds of thousands more people missing rent payments could collapse the commercial-mortgage market and set off waves of aftershocks throughout the economy. Tom Barrack, chairman and chief executive officer of Colony Capital Inc., warned last month that the U.S. could be on the verge of an economic crisis worse than the Great Depression.
Tom explained a bit of economics to Bloomberg:
“To keep people employed, you have to support the employers. The biggest part of employer expense is rent. When commerce stops and they can’t pay rent and they can’t pay interest on the debt, and then the banks and the intermediaries can’t pay their investors, it all collapses.”
As part of a rescue plan, Tom thinks the federal government should flush $500 billion worth of taxpayer funds as liquidity into the American financial system, “including for loans and repurchased contract.”
Three more prongs:
- Suspend mark-to-market accounting and certain rules over loan-modification
- Delay a new accounting as governance over the recognition of credit losses until 2024
- Give banks leeway in offering mortgage-loan forbearance
In Tom’s view, “What everybody needs is just a time out.”
But there has to be a balance.
The challenge, he said, is finding a solution that safeguards the banking system while avoiding the perceptions of “crony capitalism” associated with the bailouts that followed the 2008 financial crisis.
May we find our way through this difficult time, and come out on the other side stronger.
Amid the pandemic and economic strife, of course, some are finding alternate ways to deal — by way of the American spirit of helping those in need.
Please read more on that — which is to say, read about something wonderful — here:
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