CDC Outlines New Ban on Apartment Evictions

Earlier in the pandemic tenants and landlords may remember layers of complicated executive orders which outlined when tenants could be evicted for non-payments. At a federal level the evictions were for all apartment tenants whose landlord’s had a federally backed loan that lasted until the end of July of this year. On top of that, in New Hampshire, an eviction ban for all property types ran through June. 

Under both of these programs it was noted that the rent money was still due even though there was an eviction ban in place.  However, there was concern that tenants who were in economic trouble would see their rent accrue and be faced with a lump payment at the expiration of these moratoriums. To combat this, Governor Sununu used some of the CARES Act funding to put direct payments into the hands of tenants who found themselves in these situations. The total funding amount was $35 Million, with just some of those funds making it out as of September.

Now another moratorium from the federal government has been issued. This time from the CDC, which outlines that tenants of apartments cannot be evicted for nonpayment alone. It only applies to tenants who earn less than $99,000 individually or $198,000 jointly. Additionally, they have to illustrate that they have exhausted all other assistance opportunities and that their inability to pay is based directly upon COVID. Much like the other eviction bans outlined above, this new program does state that the rent is still due.

This program is still new and it will take time to work out. Based upon what we are hearing, there are various housing groups lobbying around the order, which may result in further modifications or legal challenges. In the short term the ban is in effect and landlords should read in detail prior to taking any action against any tenant.

COVID-19 and Investment Real Estate: Apartments

The COVID-19 Virus has made a giant impact on the health of people around the world. We encourage everyone to be vigilant and follow the guidelines in place to protect oneself. Not to minimize the health effect, these articles will be about COVID-19’s impact on real estate, which is our expertise. The stock and bond market is widely transparent on a minute by minute basis and we hope to provide a transparency into the real estate market. Check back each week for a new look into how COVID-19 is affecting the commercial real estate industry.

In a retrospect, it will be easy to see how the path for COVID-19 was forthcoming, and took some time to hit domestically. But, from the reaction of the stock market, it felt like the impact was overnight. The week that followed was a rollercoaster, but the same cannot be said for the investment real estate market. The reality is that until we see a string of real estate closings we will not be able to pin point the actual market in the investment world. For many apartment owners though, it’s business as usual.

The investment world of commercial real estate has long been a hot market. Nothing speaks that fact truer than apartments. Fueled by historically low vacancy and interest rates, investors have flocked to that asset class, which has driven up the per door price, and driven down the capitalization rates.  In addition, apartments have been seen as an investment class that is protected from some of the concerns in the larger real estate economy. “Everyone needs a place to live,” and, “Amazon cannot take away the need for apartments,” have been phrases of conventional wisdom.

In speaking with investors this past week, these thoughts still prevail. They feel that, in the long run, apartments are one of the safer asset classes out there. Some investors have even made plans in this low interest rate environment, to free up capital for more acquisitions. Others are staying put, waiting to see how the market plays out. 

There are facts that everyone agrees on, though. One is that no one is a seller right now. It is not out of concern that the market is down and investors won’t get their value, but rather that investors do not want to put their money elsewhere. The second is that investors/landlords will need to work through the next few months with their tenants with compassion, with payment plans being one solution, particularly for those tenants with jobs in hard hit industries.

When investors were asked about the impact of the order by the Governor to put off all evictions in the State of New Hampshire, again there was some common ground. Most folks believe that the tenants who will pay are going to pay, and those who will not, won’t. In the end, investors feel the impact of COVID-19 will take a little time to work through the system.

So far folks have not seen changes to their income stream, with some investors noting that they are still getting rental applications. Time will tell, but it appears that the initial reaction from the apartment sector is that the impacts have not been felt.

Are you a landlord? Let us know how the pandemic has been affecting your multifamily/apartment investments in the comments below.