John Pawlowski, a senior analyst at real estate research firm Green Street Advisors, said he doubts the apartment industry would see an immediate crash if the additional unemployment benefits aren’t extended. People will skip things like auto and credit card payments to cobble together enough for rent.
“People still need a place to live,” he said.
But over the long-term, rental revenue will decline because of missed payments and lower occupancy as tenants look to save money by doubling up with others, Pawlowski said. Landlords could end up missing more than $22 billion in rent over the next four months, according to the Stout analysis.
Chuck Sheldon manages about 1,650 apartments in Albuquerque, New Mexico, about half of which he owns. Rent collections have been far better than he had feared in late March, when several states were going into lockdown.
Sheldon’s T&C Management tends to rent to more blue-collar and service workers who have been disproportionately hit by job losses. Most have tried to stay current, he said, and the $600 unemployment boost has been a “huge” part of that.
“When it drops off, that’s going to be painful,” he said.
This article was provided by Bloomberg News.