The past six months have been unprecedented for the American economy at large, as citizens navigated stay-at-home measures, businesses worked to safely reopen, and the real estate industry quickly adapted to shifting demands on residential and commercial spaces.
Despite turmoil and future unknowns, the multifamily sector has been resilient, as people always need a place to live, and during the pandemic their homes have become more important than ever. From April to August, more than 90 percent of households have continued to pay their rents each month, according to the National Multifamily Housing Council (NMHC), and experts suggest that while not immune from COVID-19’s impact, multifamily properties are likely to remain solid investments.
While that is a longer-term prediction, what’s clear is that the federal government’s Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law in March, bolstered the industry in real time. The major components of the law included a $1,200 stimulus check ($2,400 for married couples and an extra $500 per child), increased unemployment benefits in the form of an additional $600 weekly to qualified unemployed workers, and Paycheck Protection Program (PPP) loans for businesses. Federal relief has helped Americans pay their rent and keep the multifamily sector afloat, driving increased urgency for a second bill that is expected to continue much of these efforts.
The benefits of the CARES Act have been clear as a record number of workers lost their jobs due to the pandemic. Over 160 million Americans received stimulus checks. Between March and August, PPP loans helped keep more than 5 million small businesses afloat, allowing them to pay eight weeks of payroll to their employees and cover other costs to remain viable, which in turn helped their workers to pay their bills. According to the National Employment Law Project (NELP), a nonprofit research and policy organization, these increased unemployment benefits served as a key economic stabilizer, helping workers make ends meet and uphold their living standards. Roughly 30 million Americans are receiving jobless benefits as of the writing this article.
The CARES Act has been especially critical in supporting low-income communities of color. A Washington Post-Ipsos poll taken in May showed 16 percent of Black workers and 20 percent of Latino workers reported being laid off. Ultimately, the money received through the CARES Act has not only kept cash in Americans’ pockets, it helped them cover the cost of rent and other basic necessities.
August was the first month that unemployed Americans went without the extra $600 a week provided by the CARES Act, leading to forecasts that an increased number of households would miss rent payments in September. The president of NMHC warned in a statement at the time that while “the industry remains encouraged by the degree residents have prioritized their housing obligations so far … each passing day means more distress for individuals and families, and greater risk for the nation’s housing sector.” He urged that “if policymakers want to prevent a health and economic crisis from quickly evolving into a housing crisis, they should act quickly to extend financial assistance to renters.”
A second round of economic impact payments has support from 70 percent of American adults, according to a recent Gallup poll, but it continues to be hotly debated in Congress. While the deliberation continues, relief was recently granted in the form of the federal Lost Wages Assistance program, which is paying an additional $300 per week in unemployment benefits to qualifying workers, and states are working to introduce further benefits that close the gaps for those who don’t qualify.
ArborCrowd has an investment focus in multifamily workforce housing that Americans depend on, particularly during an unprecedented economic and public health crisis. It’s clear that continued federal assistance while the economy is recovering is important not only to support renters to remain in their homes, but to help maintain a historically stable and resilient asset class, and an economy whose lifeblood is the people who live in these properties.