“These small owners who didn’t have the cash to survive this are simply cashing out to try and save their retirement income.”
While the CDC has recently said its latest extension of the federal eviction moratorium will be its last, several state moratoriums remain that multifamily landlords have to navigate.
And that’s forcing some mom-and-pop landlords out of business, Robert Pinnegar, CEO of the National Apartment Association, told CNBC in a recent interview.
Landlords owning one to five single-family rentals account for 88% of the 14.9 million SFRs across the country, Pinnegar said—and he maintains that in a recent survey, 11% of them say they’ve sold one property as the result of the pandemic. And 12% have sold their entire portfolio.
“These small owners who didn’t have the cash to survive this are simply cashing out to try and save their retirement income,” he told CNBC.
It’s a move some housing advocates say jeopardizes affordable housing, since many of those transactions included institutional buyers. The $3.4 trillion SFR market is expected to surpass multifamily, office, retail, storage, and hospitality growth by 2022, according to Walker & Dunlop, and as the asset class has grown in popularity it has become flooded with capital from institutional investors. Lennar launched a $4 billion SFR platform in March, and JP Morgan Asset Management made a $625 million equity commitment last year to American Homes 4 Rent to develop approximately 2,500 homes in high growth markets across the West and Southeast.
But as the eviction moratorium drags on, the apartment industry “in an unprecedented way” is working with renters to set up payments plans, and to assist them in applying for relief funds in jurisdictions where they’re available.
“If you know the dollars are going to be coming and the person is actually working with you cooperatively, it doesn’t make any sense to evict,” Pinnegar told CNBC. The eviction process can take up to 90 days, and courts are already backlogged with existing civil matters that piled up during the pandemic.
And while the latest round of stimulus included some resources for landlords, Pinnegar cited Moody’s data showing that there’s currently $18.6 billion in unfunded rent debt. By the time July rolls around, he says that number “could easily” hit $25 billion.
“This is a growing crisis, and the faster we can get dollar out, great,” he said in the interview. “But also the quicker we can get the economy open and people working again, that will really be a long term solution.”