Apartment Tenants Increasingly Turn to Credit Cards to Pay Their Rent
Brian Zrimsek, Industry Principal at MRI Software, says he sees a rising cause for concern as credit card payments among market-rate unit residents continue to increase.
“Residents may be amassing credit card debt in order to pay rent,” he said in a statement. “This is especially worrisome given the coming expiration of enhanced employment benefits, along with the rise in COVID-19 cases in major multifamily markets across the country, which could lead to renewed shutdowns and more unemployment.”
Multifamily rents in the US also decreased by $2 in June, down to $1,457, resulting in negative year-over-year growth for the first time since December of 2010. Of the top thirty rental markets in the United States, 19 have experienced negative growth, with four of the top five markets in California showing declines, including San Jose at -1.1% and San Francisco at -0.9%.
Zrimsek also commented that policies from the government “that protect individuals as well as businesses will help determine whether we encounter a perfect storm or a situation where landlords and tenants can keep themselves afloat throughout the pandemic.”
Rent collection is still on par with 2019, with July of 2020 showing only a 2% decline in rent collected. But July will mark a new wave of uncharted territory as it is the last month that allows many Americans to collect an extra $600 in stimulus money from their unemployment claims. Without that much-needed cash, many Americans will be stretched even thinner financially, with August being a signal as to what may be a long remainder of the unrelenting year.