Missed rent payments grow
A growing percentage of Bay Area tenants missed rent in September as persistent unemployment and shrinking federal aid compounded the stress on renters and landlords.
Rent payments in San Jose, Oakland and San Francisco during the first week of September dropped roughly 9% from the previous year, according to data released Sept. 9 by real estate data firm Realpage, among the biggest drops in the nation.
The percentage of renters making at least some payment in September fell, year-over-year, across the region. The rate dropped from 92.9% in September 2019 to 83.7% this September in San Jose and Santa Clara County. During the same period, the rate of East Bay rent payments fell from 90.4% to 81.2% and decreased in San Francisco and San Mateo County from 91.3% to 82.3%.
Realpage market analyst Adam Couch said renters are struggling more in high-cost markets. Federal unemployment benefits early in the coronavirus crisis helped renters pay their bills. He cautioned that the Labor Day weekend likely delayed reporting of some payments.
The drop in San Jose, Oakland and San Francisco, Couch said, “is one of the largest that we’ve seen across the nation.”
The extended health crisis has set public officials, landlords and renters searching for relief and ways to forestall evictions and widespread displacement. Staggering unemployment, reaching nearly 8 million in California, has hit service workers and others hard. About 1 in 5 new unemployment claims filed in the U.S. in the week ending Aug. 22 were from California.
Bay Area rents, despite recent dips, remain among the highest in the country. The median price in September for a two-bedroom apartment in San Jose was $2,750, $2,800 in Oakland and $4,070 in San Francisco, according to apartment site Zumper.
The region’s rental market has shown signs of weakening throughout the crisis. Bay Area rent payments have slipped monthly since Realpage reporting began in April. In June, for example, Bay Area payments ranged from 86.9% (San Francisco, San Mateo County and the East Bay) to 88.5% (Santa Clara County).
The crisis has hit hardest among renters in older, less expensive units known as “Class C,” Couch said. About 65% of tenants in these less expensive units nationally made payments in September, a drop of 10% from the previous year.
The market is also weakening nationally.
About 76% of U.S. tenants have made some payment in September, down from 80% at the beginning of the crisis in May, according to a survey released Sept. 9 by the National Multifamily Housing Council. Real estate experts say the decline in federal aid and sluggish pandemic economy have hurt renter performance.
Supplemental federal unemployment insurance, an additional $600 weekly, expired in late July. This month, out-of-work residents are scheduled to receive an additional $300 weekly payment drawn from Federal Emergency Management Agency funds. Congress has not passed a new stimulus bill, although negotiations are expected to heat up this month.
“The initial rent payment figures from September have begun to demonstrate the increasing challenges apartment residents are facing,” said NMHC president Doug Bibby. “Falling rent payments mean that apartment owners and operators will increasingly have difficulty meeting their mortgages, paying their taxes and utilities and meeting payroll.”
Advocates for large and small landlords across California have called for federal assistance to boost financially vulnerable tenants and property owners.
Bay Area relief agencies report record demand for their services. San Josebased Destination: Home repor ted receiv ing 30 times more requests than normal during the pandemic. More than 9 in 10 requests have come from households of color.
The Law Foundation of Silicon Valley has received 2,300 calls for legal assistance during the pandemic, a dramatic increase from normal caseloads.
A new state law enacted this month weakened a ban on evictions for nonpayment of rent during the crisis. Tenants cannot be legally displaced for rent owed between March and August but must pay at least 25% of their monthly bills through January or face possible legal consequences.
As the courts have reopened, foundation lawyers have been representing tenants facing eviction for health and safety reasons.
Staff attorney Caryn Hreha appeared in court to represent a single mother with two school-age children for a lease violation. The woman, a nurse, has seen her income dwindle with the elimination of elective surgeries. She has not paid rent in six months.