Update: The Impact of COVID-19

#36 — December 4, 2020

Dominium has been focused on our business and operations during this pandemic crisis. As we move past the critical rent collection part of each month, we will focus our updates on 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 as well and will send other information our way as well. A collection of all previous updates can be found at COVID-19 Impact Update.

Rent Collections—Steady State Continues

November Recap: Through November 30th, 2020 we have collected 90.6% of charges for the month. Out of the 203 properties, 18 have collected less than 70% of November 2020 charges representing $0.3M remaining to collect while 81 properties have collected over 94% representing $0.2M 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.

December Early Report: Through December 2nd, 2020 we have collected 43.0% of resident charges for the month and 44% of total charges for the month. Total receipts are: Up 4% compared to November through the 2nd,  Down (8%) compared to October 2020 through the 2nd, and, Down (2%) compared to September 2020 through the 2nd.   Subsidy receipts are 48% collected, which is: Up 16% compared to November 2020, Down (17% compared to October 2020 through the 2nd, and,  Down (5%) compared to September 2020 through the 2nd.   Receipts at both Senior and Family properties are 48% collected.

The chart below shows the distribution of properties on their collection performance in December 2020 through the 2nd. Out of the 203 properties, 28 have collected less than 20% of December 2020 charges representing $0.9M remaining to collect while 21 properties have collected over 60% representing $1.1M 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 Fannie Mae shared their research and insights, Economic & Housing Weekly Note Archive, which links to weekly articles related to consumer spending, home sales, job gains, among other economic topics. Initial unemployment claims in the US fell by 75,000 last week following a recent increase the weeks prior. Consumer spending and retail sales increased in October, but at a far slower rate compared to prior months. Only 440,000 jobs were added in November compared to 638,000 in October. As the virus surges across the country, governors are tightening restrictions to quell the spread. CBRE released their US Multifamily Research Brief that measured market rate multifamily demand across the country comparing comparable market sizes to provide a larger picture of the COVID-19 affected market. The strongest markets were medium, medium small or small markets, with three major metro areas ranking in the top third: Fort Worth, Fort Lauderdale, and Atlanta. Greenville ranked as the best market and demand as of Q3 2020. Weak quarterly earnings reports from major apartment REITs highlight a bleak picture for urban rental markets. The Coronavirus pandemic has shifted housing demand away from urban high-rise apartments and to larger single suburban family homes, leading to spiking urban vacancies. Yardi Matrix released its November 2020 Employment Bulletin with insight into job losses and how they are hitting metro areas around the country. They note that metro areas with the best job performance are those with smaller leisure and hospitality industries, like Indianapolis that only lost 6.5%. Metro areas that were hit hardest with the virus earlier this year have paid the price. Big cities are once again feeling the effects of the pandemic following months of workers returning to the office. At its lowest point only about 15% of employees were in the office. By mid-November it was up to 25% of employees, dropping slightly during the Thanksgiving holiday week. Although employers would like their employees back in the office to help encourage collaboration, many are extending work from home policies into 2021 as cases around the country surge. According to Reuters, affordable housing experts are seeing the election of Joe Biden as a turning point for affordable housing. Biden’s proposals include an expansion of affordable housing tax credits, building millions of sustainable homes, and bolstering federal assistance to expand access to subsidized housing.

Economic News The Federal Reserve released its final beige book for 2020, highlighting economic conditions since October. Overall, the Federal Reserve districts have seen modest to moderate recovery, slowing in late November as coronavirus cases began to increase. Employment rose at a slow pace across the country, while recovery of jobs remained incomplete, input prices rose modestly, and final prices rose slightly. The next coronavirus stimulus package is showing signs of promise with a new, bipartisan $908 billion relief bill. Democrats are willing to discuss a smaller package than they proposed with Republicans as some unemployment benefits and extended paid family leave expire at the end of the year. The new relief package would run through March 2021, with $160 billion in state and local funding, $288 billion for small-business relief, $17 billion for airlines, $16 billion for vaccine distribution, $82 billion for schools, $25 billion in rental assistance, and $180 billion for additional unemployment insurance. The IRS still need to process around 1 million 2019 tax returns as the pandemic and stimulus checks interrupted operations this year. This number is down from 2.5 million in October, and they only have 3 million pieces of mail that remains unopened, which is down from 5.3 million. According to IRS Commissioner, Charles Rettig, there are 6.8 million returns in process. The IRS was impacted by the same COVID issues as other employees with working from home and safety protocols. Business travel could be permanently impacted by the pandemic with an estimated 36% drop as some meetings and conferences will remain virtual. The Wall Street Journal estimates that between 19% to 36% of all trips will likely be lost after reviewing data and consulting with former chief executive of Spirit Airlines, president of Travelers United, and president of IdeaWorks. The top 15% of airline customers account for around 40% of revenue, or $334 billion of the $1.1 trillion total travel industry revenue.

Pandemic News The US has surpassed 100,000 people hospitalized with COVID-19 and nearly 200,000 new cases reported in a single day. Nearly 14 million infections have been reported in the US alone. With increased air travel over the Thanksgiving holiday, experts believe that COVID numbers could continue to rise into December. The CDC is urging Americans to not travel over the Christmas holiday. Moderna requested authorization for emergency use of its vaccine from the FDA on Monday, November 30th. With an effective rate of 94.1%, the company says that inoculations could start as early as December 21st if approved. Their study shows that the vaccine was 100% percent effective preventing severe cases of COVID. They are also on track to produce 20 million doses by the end of 2020, which as a two-part vaccine, it could vaccinate 10 million people. The UK approved the two dose Pfizer-BioNTech vaccine this week with enough doses to inoculate 20 million people. Priority access to the vaccine will be given to residents and staff of care facilities, people of 80 years old, and health care workers. A draft ranking has also been released, with those over the age of 65 given priority, then those 16-64 with underlying conditions. The Department of Health and Social Care will contact individuals as their turn to get vaccinated approaches. The New York Times details why the UK approved the vaccine before the US. The main reason is due to how the UK and the US vet vaccine data. US regulators reanalyze raw data provided by the vaccine maker before providing authorization. Whereas the UK and many other European countries rely on the companies’ analyses and reports and will only slow the approval process if anomalies are found in the company produced reports. Three former US presidents said that they will get the coronavirus vaccine on camera to encourage the public to get the vaccine. President Obama said that if Dr. Fauci thinks the vaccine is safe and effective, he will get the vaccine. Following his comments, President Bush and President Clinton have agreed to do the same and will do so on camera if it will help urge Americans to get vaccinated. Free, anonymous coronavirus exposure notifications are now available to millions of Americans buried within the settings of their smartphones. The notifications use Apple and Google software to alert users if they have been in close contact with someone who later tests positive for COVID-19. The notifications have raised privacy concerns, but the system uses Bluetooth technology and does not store location data making it anonymous. This article from The Washington Post also includes links to local health authorities about how to get notified as well as how to turn on alerts in the settings of your smart phone. The CDC said that the coronavirus quarantine can be shortened from 14 days to 10 or even 7 days. The move acknowledges that 14 days can be prohibitive for some who are unable to take that much time away from work. The hope is that a shorter period of time to quarantine will encourage more people to adhere to it. Quarantine applies to those who have been exposed but do not have a confirmed infection. The Washington Post notes that this is a developing story. As millions of Americans traveled over the Thanksgiving holiday, health officials are worried that it could only get worse over the Christmas holiday. If people travel and gather over Christmas, they project that hospitals could be forced to have to choose which patients to save and which to let die. The TSA screened 4.6 million passengers over Thanksgiving weekend, which is the busiest weekend since the start of the pandemic, leaving airports unprepared for adequate social distancing. Officials suggest that if you traveled this holiday, to avoid crowds and wear a mask, and get tested. The CDC advisory group voted on December 1st on who should be first in line for the vaccine and determined that health-care workers and residents and staff of nursing homes or long-term care facilities should be first. Health care workers are a priority due to their exposure to the virus. Whereas staff and residents of care facilities account for 40% of COVID deaths. A Department of Health and Human Services spokesman said, “Doctors will make their recommendations, and ultimately the governors will make a determination of what works best for their communities.” There is some hesitation administering the vaccine to nursing home residents, as the trials have been on a healthy older population, rather than those who are more frail. As COVID-19 surges across the country, many rural areas are being hit the hardest as cellphone data confirms that rural Americans are leaving home as much as they did before the pandemic. Infection rates were 60% higher in rural areas compared to urban areas by mid-November. Rural Americans spent an average of 5 hours away from home every day by mid-November. As the virus surges across middle America, mask mandates are being put in place to help quell the spread. Pandemic pods have been forming around the country to try to keep each other safe, with small, closed bubbles of families or friends to allow homeschooling together, vacations, etc. with the understanding of mutual risk. Forming pods have proven to be helpful for improving mental health, allowing some semblance of normalcy seeing friends. Some pods are not static, as some leave the pod after taking on additional risk. In creating a pod, it is important to establish permissible activities and plans for positive test results. The December 3rd episode of the Osterholm Update: COVID-19 discusses what to expect post-Thanksgiving, vaccine distribution recommendations from ACIP, the shortened quarantine period, vaccine distribution timelines, and how to talk to kids about the global pandemic. IHME has changed their daily infections and testing to project the trajectory of infections based on easing mandates and closures and universal mask wearing.

Other Interesting & Helpful Resources

Bloomberg discusses how COVID-19 is impacting the global food supply chain in a new video. Food insecurity is now affecting 52 million people in the US, which is an increase of 17 million people since the beginning of the pandemic. The biggest driver for this insecurity is job loss and the inability to pay for food, but there is no shortage of food available. As restaurants started closing, the supply chain was affected as farmers had to adjust where to send their products. Some farmers shifted to pick up at their farm or to farmers markets to make up for missed restaurant sales. The Coronavirus Food Assistance Program was launched in April to help support farmers, allowing them to process food that would have gone to restaurants and make it available to foodbanks.

State-by-State Actions Schools: Education Week Reopening & Closing Status: The New York Times  Construction Limits: Architect Magazine

Airline reward credit cards are seeing the effects of the pandemic as many frequent travelers have canceled travel plans for this year. Travel purchases were down 70% on Visa this last quarter compared to prior year, while spending on travel and entertainment was down 69% on American Express. People have moved to using debit cards during the pandemic. Visa also noted that debit volume was up 20% this quarter, and credit card spending was down 9%. The NFL and college sports are continuing despite the surge in cases across the country. Teams are playing through cases, without star coaches, and even the NFL has shut down facilities for a few days. However, as the pandemic is getting worse, the sports world is soldiering on. However, as the country was advised to stay home for Thanksgiving, NFL games continued even though several games had to be postponed due to cases sidelining teams. The 49ers have to play the next two home games in Arizona, as their home county deemed contact sports unsafe. The Broncos played without a quarterback this week as their starter and back ups were sidelined. Over a dozen college basketball games were cancelled this past weekend, as cases continue to push games and force players to the bench. The New York Times interviewed an astronaut, a station leader of research in Antarctica, and someone who was sealed in Biosphere 2 in the 1990s for some tips on how to deal with life in isolation. Key pieces of advice include adaptability, managing expectations, and being patient. As the Antarctic station leader said, “Not every day can be sunshine and penguins.”

Resident Resources National Low Income Housing Coalition put together a State and Local Rental Assistance guide for COVID-19 Emergency Rental Assistance Programs around the country. 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. 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. The United Way is assisting residents in Minnesota with COVID housing assistance program. Those needing support can call 211 or toll free at 1-800-543-7709.

Dominium Resident Resources Information on filing for unemployment Family Housing Fund has put together resources for households impacted by COVID-19, ranging from legal help, utilities, food, unemployment insurance and more. Housing Link has provided tips for emergency assistance in the Twin Cities with contact information by county. National Alliance on Mental Illness Minnesota also has a list for families of financial and housing resources. You can also search for reduced cost services by zip code on their website.

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 month 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

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