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The Real Estate Apartment Crisis

The typical delinquent apartment renter now owes $5,600, being nearly four months behind on their monthly payment, according to a new analysis. This also includes utilities and late fees.

In total, an astounding $57.3 billion is owed by just more than 10 million renters.

About 18% of apartment renters in America, or around 10 million people, were behind in their rent payments as of the beginning of the month.

This is worse than the Great Recession

It is far more than the approximately 7 million homeowners who lost their properties to foreclosure during the subprime mortgage crisis and the ensuing Great Recession. And that happened over a five-year period. 
In one of his first executive orders, President Joe Biden extended the Centers for Disease Control and Prevention’s current eviction moratorium through the end of March, but that is unlikely to be long enough.

Real Estate Study

A new analysis from Mark Zandi, chief economist at Moody’s Analytics, and Jim Parrott, a fellow at the Urban Institute, shows the typical delinquent renter now owes $5,600, being nearly four months behind on their monthly payment. This also includes utilities and late fees. In total, an astounding $57.3 billion is owed. This includes all delinquent renters, not just those suffering financially due to the Covid pandemic.

The $900 billion relief package passed in December provides $25 billion for both renters and landlords. It is being disbursed by the states and can be used for past and present rent, as well as fees and utilities. Renters must show that they suffered financial hardship due to the pandemic, have incomes below 80% of their area median income, and are at risk of becoming homeless.

The Biden Administration

The Biden administration has proposed $25 billion in additional apartment rental relief in its $1.9 trillion stimulus package. It includes an extension of the eviction moratorium through the end of September 2021. That plan is already drawing criticism from Republicans and even some Democrats as being far too expensive. It remains to be seen if any cuts to that plan would come from the rental relief.

Boston Real Estate and the Bottom Line

Meanwhile, landlords, many of whom are now struggling to pay the mortgages on their properties, are concerned that an extension of the eviction moratorium through September would do more harm than good.

Allocated rental assistance funds do not fully address the $70 billion in outstanding debt nor accruing debt moving forward. The industry simply cannot continue operating under these policies without disastrous harm to housing affordability.

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