Update: The Impact of COVID-19
#29 — August 25, 2020
Dominium has been focused on our business and operations during this pandemic crisis. These updates provide a summary of both rent collections and information that we have found useful in the work we are doing. We hope that our friends and partners in affordable housing find it helpful and will send other information our way. A collection of all previous updates can be found at COVID-19 Impact Update.
Rent Collections—THE AUGUST SURPRISE CONTINUES
Payments of August rent reversed the trend experienced in July and payments through 9th are only slightly down from the trend in June of 2020. We had anticipated additional weakness in rent collections in August, due to the lack of continued Federal unemployment payments.
Through August 24, 2020 we have collected 93% of charges for the month.

  • Cumulative receipts are flat compared to July through the 24th
  • Cumulative receipts are down (1%) compared to June through the 24th
  • Cumulative receipts are flat compared to February 24th, the most recent month in which the 1st fell on a Saturday.

In terms of types of properties or receipts:

  • Resident receipts are at 92%, which is up 2% compared to July through the 24th and down (1%) compared to June through the 24th. They are down (1%) compared to February 24th.
  • Subsidy receipts are at 97%, which is down (1%) compared to July through the 24th and flat compared to June through the 24th. They are up 5% compared to February 24th.
  • Senior total receipts are 100%, which is up 3% compared to July through the 24th and up 2% compared to June through the 24th. They are up 2% compared to February 24th.
  • Family total receipts are 90%, which is up 2% compared to July through the 24th and down (2%) compared to June through the 24th. They are down (2%) compared to February 24th.
The chart below shows the distribution of properties on their collection performance in August through the 24th. Out of the 207 properties, 12 have collected less than 73% of August charges representing $0.1M remaining to collect while 60 properties have collected over 97% representing $0.0M remaining to collect.
The lowest collection category is primarily made up of Section 8 properties which are impacted by timing with changes between resident and subsidy owed charges. The below distribution excludes these properties and follows the expected trends.
Previous Dominium Rent Reports can be found here.
Housing & Employment News
This week’s episode of the podcast Post Reports by The Washington Post discusses how the rent relief expirations will see evictions skyrocket across the country in a time when unemployment is also high. Again, Black Americans are disproportionately affected by this. And landlords are pushing back on federal moratoriums on evictions.

Due to uncertainty caused by the pandemic’s effects on the job market, many renters and landlords are agreeing to more flexible, month-to-month leases. Landlords cite concerns that tenants locked into year-long leases may find themselves unable to pay, while many renters cite the potential need to relocate away from city centers to find employment. This pattern has given some renters leverage to receive discounted rents and waived fees.

New US unemployment claims have fallen below one million in early August for the first time since the beginning of the pandemic. Nearly 1.8 million jobs were added in July, which may have contributed, with the jobless rate falling to 10.2% from 15% in April. Thirty one percent of workers that were put back on the payroll were laid off again, according to a Cornell University survey.

Forbes reports “Four Key Takeaways The Multifamily Industry Learned From The Pandemic” discussing how the multifamily industry is responding and stated that it’s “most important lesson learned is the need to be resilient.” The takeaways include leasing is the new norm, shifting from urban to suburban, moving amenities outdoors, new demands for living space.

Inequality in housing has been exacerbated by the pandemic, which will likely continue after the pandemic is over. Over 7 million more affordable housing units are needed in the US to meet the demand that has been affected by high unemployment, the pandemic, and lack of housing. Multi-Housing News discusses the effect of the pandemic on affordable housing and the multifamily housing industry and what the future might look like.

National Apartment Association and the Institute of Real Estate Management sponsored a survey of apartment owner and operators and are reporting their July findings. Only 5% of owners said that 11-20% of residents would face evictions if the moratoriums were not in place. More than a fourth of respondents believe that their residents would not be able to pay rent without the $600 federal unemployment benefit. And nearly a quarter of operators believe that it will take 1-2 years to return to pre-pandemic operating levels.

According to Bloomberg, 16% of FHA mortgages were in delinquency in the second quarter, up from 9.7% in the first quarter of 2020, and setting the highest level since records began being kept in 1979. New Jersey had the highest rate of FHA delinquencies, followed by Nevada, New York, Florida, and Hawaii.

The article cites this from the Mortgage Bankers Association. This piece notes the following statistics:
  • 22% of all mortgages on 1-4 unit residential properties were in delinquency at the end of Q2, the highest recorded. Shares loans delinquent for 30-60 days is the highest on record, and the 0-30 days and 60-90 days both increased over Q2% as well.
  • Total delinquent loans increased
- 352 bp to 6.68% of conventional loans outstanding
- 596 bp to 15.65% of FHA loans outstanding
- 340 bp to 80.05% of VA loans outstanding
  • Seriously delinquent loans (90+ days past due or in the process of foreclosure) increased
- 219 bp for conventional loans   
- 467 bp for FHA Loans
- 217 bp for VA loans
  • Estimated 4.2 Million homeowners were on forbearance plans as of June 28
  • Share of loans on which foreclosure actions were started in the second quarter actually fell by 16 bp from Q1 to 0.03%
 

Forbes reports that mortgage forbearance rates are falling except for forbearance applications for FHA and VA loans. In the last week of July, these applications rose for the third straight week, increasing by 11.9%. Mortgage Bankers Association attributes the rise to the slowing economy due to rising cases around the country. To date there are 4.1 million loans in forbearance.

Forbes also reports about the spikes of delinquencies and the options available to those in need of relief. A majority of those unaware of relief options are communities of color, and nearly 5.3 million US heads of household speak limited or no English. Based on advice from the Vice President of mortgage resolution at Navy Federal Credit Union, those who are unable to pay should do the following:
  • Call before the loan becomes past due
  • Some loans (Fannie Mae, Freddie Mac, or Ginnie Mae qualify for forbearance under the CARES Act, which can last up to 6 months and also be extended for another 6 months
  • Borrowers not covered by CARES Act should contact their lenders
- Many lenders are working with their borrowers to come up with an affordable plan
  • If borrowers are not receiving help from their lenders, they should contact a HUD approved housing counseling agency.
  • Lastly, they can file a complaint with the CFPB if they cannot get in touch with their servicer
 
  • Better Mortgage
  • CitiMortgage
  • Bank of America Mortgage
  • Navy Federal Credit Union Mortgage
  • Rocket Mortgage
  • PNC Bank Mortgage
The article also notes that if a borrow is unable to pay, they have to ask for forbearance, otherwise one could trigger late fees or hurt their credit score.
Pandemic News
The August 13th episode of the Osterholm Update: COVID-19 was recorded live and discussed immunity to COVID-19, how to find quality information about it, test reliability, and answered listener questions.

It took only six weeks for the number of global coronavirus cases to double from 10 million to 20 million, whereas it took 6 months for the world to reach 10 million cases. On average, the number of new cases in the US per day is around 54,000. The US has seen over 5 million cases and over 163,000 deaths, the most of any country. Given testing limitations, the number of cases in the US is estimated to be maybe 10 times higher than reported, according to the CDC.

New data shows that COVID-19 may have serious effects on the heart causing myocarditis. A German study revealed that of 100 individuals who tested positive for the virus (either asymptomatic or mild symptoms), 60 of them had evidence of myocarditis, whereas 80 percent had persistent abnormalities.

Even though a vaccine may be developed as early as the end of 2020, experts contend that most Americans will not be able to get vaccinated until mid-2021. The vaccine will require two doses and the first wave of vaccines available going to healthcare workers and other high-risk individuals. Dr. Fauci said “I would hope that by the time we get well into the second half of 2021 that the companies will have delivered hundreds of millions of doses they have promised.”

Clinical trials for the coronavirus vaccine are taking longer than anticipated due to staffing shortages, testing delays, space constraints and other factors. Because of this, ambitious September vaccine production projections are getting pushed to later this year or year’s end.

Bloomberg how the coronavirus is impacting communities of color disproportionately, which can vary based on geographic location in the US. Of the deaths per 100,000 people, Black Americans make up 69.7 people compared to 33.8 white Americans and 33.8 Latino Americans. The relative death risk is 3.57 times higher for Black Americans than white Americans. This disparity occurs due mostly in part to discrimination in systems, but also higher risk work, densely populated housing, less access to health care and higher co-morbidity rates. Bloomberg also notes there are racial disparities in the UK and Norway as well.

As masks become more commonplace in American society, some have opted to wear neck gaiters, which according to Duke University researchers may be worse than not wearing a mask at all. Following testing fourteen types of masks, researchers found that due to the reason they are worn by runners is because they do not restrict air and therefore are doing more harm than good. The study was also critical of N95 masks.

As US college campuses begin to reopen completely or with a hybrid model of classes, nearly 6,600 coronavirus cases have been linked to 270 campus since the beginning of the pandemic. Fourteen deaths are linked to these cases. The New York Times does state this number is an undercount. The article also includes a search tool to determine how many cases were reported at public, four-year universities in the US.

The New York Times attempts to articulate what Back to School will look like in the age of COVID-19. Schools around the country are differing in their return policies, some opting completely online, where some are doing hybrid learning, and others going back to the classroom five days a week.

The Washington Post reports that Americans are experiencing pandemic fatigue. Parents are worried about how to juggle continuing working from home and starting a new school with students either continuing remote work or going back into the classroom. A recent Gallup poll showed that 73% of adults feel as though the pandemic is getting worse, the highest level since Gallup began tracking in April.
IHME has changed their daily infections and testing to project the trajectory of infections based on easing mandates and closures and universal mask wearing.
Economic News
The Federal Reserve is close to making official its policy of relaxing price controls, targeting an inflation rate of above 2% in order increase interest rates from their historically low levels, and avoid setting negative interest rates. The Fed’s benchmark rate sat at only 1.5% at the start of the pandemic, which severely limited its ability to respond to the economic crisis.

The S&P 500 traded above its record on August 12th nearly eliminating the losses due to the pandemic with big tech stocks leading. The Federal Reserve and Congress helped support the market since the S&P 500 was at its lowest nearly 34% down.

Retail Sales rose 1.2% in July over June numbers, according to the NY Times. This increase brings retail sales in July above where they were in February, which was one of the intended effects of the stimulus bill. Economists argue that the stimulus creating such a stark recovery in consumption shows the need for another stimulus package to prevent the economy overall from stalling going into the fall.

State budgets hit hard by the coronavirus could slow US economic recovery as they reduced spending in the second quarter and laid off workers. Another relief package from Congress has stalled as the assistance for the state and local governments holding up talks.

International students that are stranded in the United States are helping to sustain small businesses in college towns around the country. Many college towns rely on business during the school year. As campuses closed mid-March this year, many businesses are struggling. With nearly 1.1 million international students enrolled in the US, many of them have stayed in the US due to closed borders and mandatory quarantines preventing them from returning home. These students are large contributors to the economy and are responsible for contributing nearly $41 billion to the US economy in the 2018-2019 academic year. 
Other Interesting & Helpful Resources
With schools already back in session or beginning to start in the US, the Associated Press asked kids around the country how they felt about returning to school during the pandemic. Many children are worried about the classmates breaking the rules related to mask wearing and social distancing, whereas others worry about bringing the virus home and infecting their family.

The Canadian border is still closed to American tourists and Canadians are reporting American license plates of those who are not abiding by the mandatory quarantine or are entering the country illegally. Canadians are cautious of Americans in the country fearing the spread of COVID-19. Penalties for breaking quarantine in Canada come with a fine up to $750,000 or up to 3 years in jail, which are meant to be serious deterrents from breaking the Quarantine Act.
State-by-State Actions
Schools: Education Week

Reopening & Closing Status:

Construction Limits:
This year’s Masters tournament will be played at Augusta National in November without fans due to the pandemic. The club chairman, Fred Ridley said, “Ultimately, we determined that the potential risks of welcoming patrons and guests to our grounds in November are simply too significant to overcome.” The tournament had previously been moved from April 2020 to November 2020.

With the outbreak in the MLB and on the Cardinals team, it is clear they will be unable to finish their 60 game season, which leads to questions about how many games a team needs to play this year to have a “credible season.” According to Commissioner Rob Manfred, even if teams cannot get all 60 games in this season, winning percentage will determine if a team qualifies for the playoffs.

Some college football has been postponed until spring 2021, which can complicate an already busy sports season with March Madness, The Masters, and the NFL draft. Those that may get drafted could end up playing nearly 26 games next year, with no breaks as the NFL combine and draft would occur by June 2nd. Further complicating matters is broadcast time if March Madness occurs at the same time as football season.

Video games have gained the most over the pandemic with gains of more than 50%. Video games and esports sales have seen record sales during the pandemic, with games like Apex Legends and Madden NFL reporting sales on tens of millions new players.

Around 650 city planners around the country wrote a letter to the American Planning Association to support defunding the police. Noting that city planners have historically contributed to redlining, toxic industrial development, and freeway construction, the planners “argue that some funds now allocated to ‘hyper-militarized police departments’ could go to anti-racist planning efforts.”
Resident Resources
Fannie Mae put together a “Here to Help Renters” resource guide. It includes tips for talking to your landlord, top things to know, and options for those in need of financial assistance. Other resources are linked to HUD, CARES Act, and state and local resources.
IRS Information on COVID-19 Checks
Information on filing for unemployment
Freddie Mac offers a Renter Helpline, which provides counseling for renters on budgeting, credit improvement and debt management. The attached flyer is available in multiple languages.

HUD has put together a guide and FAQ for Renters during the pandemic.
In an attempt to share what we know and are doing during this crisis, we are publishing a set of periodic updates for our partners and friends in affordable housing. We likely will do this twice a week or as interesting events dictate. Please let us know if you would like to be removed from this list.

Thank you,
Paul Sween & Mark Moorhouse