The Centers for Disease Control and Prevention (CDC) ultimately decided to extend the eviction moratorium through June of this year, following a period of extended uncertainty that lasted until 48 hours before the deadline. The decision, officially announced on March 29, affects 6.7 million American renters currently facing pandemic related challenges to keeping up with their monthly payment.
The continued uncertainty puts added pressure on landlords enduring the long-term burden of supporting financially challenged tenants. Likewise, the situation poses new questions for the construction industry and potential investors in apartment buildings. As a result, leading influencers in the multifamily industry have been quick to speak up about the impacts of the moratorium extension.
National Apartment Association Loudly Opposes New Extension
President and CEO of the National Apartment Association (NAA) Robert Pinnegar responded immediately by referring to the CDC’s decision as a “destructive and legally entangled policy that does nothing to address the underlying financial distress of renters.”
The NAA president went on to say that rent-pausing “…policies need to end, and we instead need to focus on swift distribution of federal rental assistance to keep renters securely housed and ensure housing providers can pay the bills that keep housing safe and operational.”
Pinnegar’s sentiments are shared by many members of the multifamily community and also reflected by academic sources that contend that the eviction moratorium alone is not a true solution to the looming housing crisis currently being accelerated by the pandemic.
Experts Predict Additional Rental Assistance May Be Necessary
Major American credit agency Fitch Ratings echoed the NAA president’s concerns in a post released just days before the moratorium was ultimately extended. The agency emphasized that it’s difficult to determine if the volume of funds designated to go toward rental assistance will be enough to meet the current challenge ahead.
Fitch Ratings specifically cited a lack of actionable data as a major problem. According to the agency, “the lack of information on delinquent rent payments makes it difficult to assess if these amounts are sufficient to hold affordable housing mortgage delinquencies in check.”
Class A Multifamily Avoids Brunt of Pandemic Woes
Landlords in the workforce and affordable space have made up the largest share of owners affected by the pandemic. Conversely, delinquencies have been considerably lower in market-rate and Class A apartment buildings as residents are more likely to be employed in industries where job losses have been offset via expansions into remote work.
Inward migration from the coast, relocations due to the pandemic, and other factors have driven surges in investment and construction activity in modern housing hot spots like Phoenix, Arizona and Houston, Texas. Momentum behind this new wave of apartment development is likely to continue mounting up as much of the country transitions into re-opening mode and vaccinations become widely available.
We touched on many of these trends last December in our 2021 Eviction Moratorium Scenarios guide. Continue to visit the Berkadia blog for the latest analysis on the biggest trends impacting the multifamily real estate.