Update: The Impact of COVID-19
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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.
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Dominium Rent Collection Report: Through April 26, 2020 we have collected 91.9% of anticipated rent. This is down by (1%) when compared to February and March collections. We conservatively estimate that month end collections will be 92.5%, down from previous months total collections.
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Dominium has been collecting information on
April Rent Collections
from others, which is summarized in the two charts here.
NMHC has been tracking rent collections industry-wide and hosted a
webinar on 4/22
to discuss their ongoing findings, why multifamily housing has been a relatively resilient industry and how to maintain that going forward in the COVID-19 Pandemic.
They also report encouraging rent receipts for the month of April as reported in their tracker.
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Housing & Employment News
Novogradac notes that deals are still closing with original pricing and terms at present and April rent collections are fairing better than originally anticipated. LIHTC transactions are continuing to close amid this crisis.
HUD published the 2020 HUD Program Limits and Multifamily Tax Subsidy Project Income Limits on March 31, 2020. This document provides calculations income limit maps discussed in a recent webinar.
Northmarq’s report discusses measures taken by the Federal Reserve in response to COVID-19, as well as remarking on impacts of unemployment on the multifamily market. Rent collections were stronger than anticipated, but they note that continued monitoring is necessary as this crisis evolves.
Greater Minnesota Housing Fund surveyed affordable rental housing owners to ascertain how COVID-19 has impacted their renters’ ability to pay April rents.
RCLCO Real Estate Advisors
sent out a survey to gather how real estate market professionals thought about the condition of the market.
The City of Minneapolis
has established Minneapolis Gap Funding allocating more than $5 million to Minneapolis residents and businesses. Emergency Housing Assistance Program will provide up to $2,000 per household depending on size to help with rent payment, utility payments and other housing stability related costs.
Cushman Wakefield’s recent webinar provided a good overview of the current economic climate and the policies decisions to address it, along with potential impacts across asset classes. Key takeaways include a projected sharp decline in GDP in Q2 and potentially drawn out recovery, but that multifamily housing rental income is resilient, in part because of policies that are supportive to renters.
CBRE’s Multifamily Finance Update remarks on trends that are occurring in the 6th week of the coronavirus downturn, including rent retention, rent declines, and slowing leasing activity.
Below are links to affordable housing-relevant webinars discussing COVID-19’s impact on the industry, as well as Dominium’s notes, taken by Mark Lambing, who participated in each:
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Pandemic News
IHME’s COVID-19
Projections
page shows trends and projections of deaths and hospital resource usage.
In a recent study, outlined here in Forbe’s, the percentage of New Yorkers who tested positive is 10 times higher than the presumed infection rate. However, this is not nearly enough to develop herd immunity, which happens when over 60% of the population has been exposed and developed antibodies.
A CNBC report indicates that antibody testing in Los Angeles County reveals that COVID-19 is more widespread, between 28 and 55 times higher than the confirmed cases. This emerging information would decrease the fatality rate in Los Angeles County.
Three articles from The New York Times provide a wealth of data on the Coronavirus:
And finally, this article outlining Italy’s nationwide
lockdown
that went into effect on March 10th and how it led to a dramatic drop in ICU patients, potentially providing an example for other countries to slow the spread of the virus.
Harvard Business Review
discusses how digital contact tracing has slowed the COVID-19 spread in East Asia. They explain different applications that have been developed over the years to trace movements of people who have tested positive for diseases. Although, these apps may be working to trace infection, they also raise questions about privacy and data sovereignty.
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Economic News
CBRE provides Q1 Retail Data and summarizes the abrupt impacts of COVID-19 on retail sales and consumer sentiment in March, as well as the implications for Retail real estate.
This Key Bank overview of economic forecasts for Q2 2020 projects increased unemployment claims, a more severe drop in GDP than previously projected, driven by both increased cuts to nonessential businesses and reduced demand from consumers.
The Washington Post reports that
Global markets
showed signs of rebounding on Wednesday following days of plummeting oil prices. Prices rebounded from $0 a barrel to around $14 to $20 a barrel. Due to nearly half the world’s population sequestered by some form of stay-at-home orders, demand for oil dropped, but with the announcements of loosening restrictions and reopening economies, demand will normalize.
Bloomberg notes that The House of Representatives voted—in person, wearing masks—on April 23 on a deficit spending bill which would fund forgivable loans to small businesses, small and medium banks and credit unions, as well as funding for hospitals and testing.
Auto news source, Jalopnik, reports that like other industries affected by stay-at-home orders and sweeping unemployment, the
used car market
is also experiencing pricing issues as vehicle sales fell 63% compared to the same time last year.
As the CDC has urged American to avoid nonessential
travel
during the COVID-19 pandemic, causing flights to be between 5 to 15% occupied. As reported on VOX news service, only slightly more than 124,000 passengers have passed through TSA checkpoints on April 2nd compared to 2,411,500 travelers on April 2nd of last year.
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Other Interesting & Helpful Resources
The Deloitte report projects four possible scenarios of how the next 3-5 years will play out as the global community and economy respond to and recover from COVID-19 and its impacts. These scenarios are primarily based on five fundamental uncertainties: Severity of the pandemic, Level of Collaboration, Health Care System, Economic Consequences, and Social Cohesion.
Cushman Wakefield provides this guide for business owners looking to address the challenges COVID-19 has created as they open up their offices.
The Minneapolis/St. Paul Business Journal writes about the Small Business Administration’s relief program and how that money is trickling into Minnesota. As the money is administered by banks, only banks that process SBA 7(a) loans are a part of the Paycheck Protection Program. Currently, nearly a total of 33,819 Minnesota businesses have been approved for a PPP loan.
In a follow up article on the PPP Loans, The Minneapolis/St. Paul Business Journal received advice from several local bankers, encouraging those that could not participate in the last round of loans to apply now and if a business’s bank is not participating in the program to ask for a referral to another bank.
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State-by-State Actions
Construction Limits:
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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
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