Is everyone really paying their rent?

Survey of 4,600 shows fewer than 50% people will be able to pay their full rent on June 1.

May 21, 2020

Jonas Bordo, CEO & Co-Founder, Dwellsy

Since coronavirus changed our world, I’ve struggled to reconcile a few contradictory statistics:

  • 38.6M new initial claims for unemployment since mid-March (Dept of Labor)
  • 39% of households are unable to come up with $400 in an emergency (Federal Reserve)
  • 87.7% of households paid their rent in May, almost the same as 89.8% last year (NMHC

How on earth is it possible that more than 38 million Americans, many of whom had little to no emergency funds, all lost their jobs and were still able to pay their rent?

I suspect the National Multifamily Housing Council (NMHC) data, while accurate, is not telling the whole story.  

From our knowledge of the market at Dwellsy.com, where we have the largest selection of residential rental listings—also the most diverse set of affordable listings—this data seemed off. In talking with renters and landlords on our platform—and augmenting the data with an admittedly unscientific survey conducted on Twitter on May 21 and 22, I heard from more than 4,600 people. Only 48.5% are confident they were going to be able to pay their rent on June 1. More research needs to be done, but this is not a confidence-inspiring figure.

We haven’t hit June 1 yet, but I suspect that the NMHC data will show a much rosier version of the numbers.  

What is the NMHC, the most authoritative source on this topic, missing?

First, the NMHC data is sourced from five property management software companies.  I know, from our work at Dwellsy, that these companies serve the largest property managers across the country.  

The apartment communities that those property managers operate are overwhelmingly higher-end properties.  Picture either high rise downtown apartment towers or large, well maintained suburban apartment communities with pools, gyms, and other amenities.  

As a result, this data is representative of the more affluent end of the market, where apartment dwellers are far more likely to be working from home than unemployed.

What this data does not include is the 75% or so of the U.S. rental properties that are owned by individual investors who have just 1-4 units (Harvard).  

Little known fact: more than 10 million Americans own rental properties (HUD). Retired folks who paid off their first mortgage and bought a second property to rent out; Gen Xers who inherited a place from their parents; Individuals who have bought a property as an investment.   

This type of property is usually a single-family home, an in-law unit, or a 2-4 unit walkup and this is most of the U.S. rental inventory.  I’ll say that again because it’s surprising to many: most U.S. rental properties are single-family homes or 2-4 unit buildings.  Not big buildings.  And most of those are owned and operated by individuals.

These 1-4 unit rental properties tend to be where less affluent folks live and they are not managed by a property management company using sophisticated software and they are not in the NMHC’s data, which therefore shows results that are not reflective of the average American renter.  

The real rent payment number?  I hope it’s not closer to 50% on June 1 – that would represent unimaginable hardship for millions upon millions of people – but it seems more likely than the numbers that have been in the news so far.

About Jonas Bordo

Jonas Bordo is the CEO and Co-Founder of Dwellsy, the free residential rental marketplace that makes it easy to find hard-to-find rentals. Prior to co-founding Dwellsy, Jonas was a senior executive at several leading real estate firms including Essex Property Trust and Bentall GreenOak and was with the Boston Consulting Group after graduating with his MBA from the University of Chicago Booth School of Business.  Jonas has had the good fortune to build, re-build and lead amazing teams across the multifamily and commercial real estate operational and strategic spectrum, manage large P&Ls, deliver big profit increases, orchestrate the sale of several businesses, develop a strategic plan for one of the world’s leading symphony orchestras, implement a Toyota production system and create more than 40 brands. He is husband to Rosalind and father to Bailey, Zac and Thea, an avid hiker, a lifelong learner and a maker of things, sometimes out of wood.

About Dwellsy.com

Dwellsy.com is a comprehensive residential home rentals marketplace based on the radical concept that true, organic search in a free eco-system creates more value than the pay-to-play model embraced by all of the current rental listing services. Indeed, while barely more than a year old, Dwellsy.com has more residential rental listings than any of the major listing sites—as well as the most diverse set of listings—including both affordable and higher-end properties. Dwellsy.com’s entirely different approach to residential rental listings focuses on presenting houses and apartments based on features renters need and want — not based on how much landlords pay to show their listings. Dwellsy investors include Blackhorn Ventures, Anne Wojcicki, Stanford Professors, and a number of residential real estate industry insiders.