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Landlords, most of them at least, have been doing just fine during the pandemic.
A new analysis by JPMorgan Chase finds that, while landlords lost money early in the pandemic, they were able to cut expenses to the point that they had higher cash balances by June 2020 than when the pandemic began.
In April and May 2020, landlords sustained a significant decline in revenue (rent payments) — roughly 20 percent, according to the research. But they were able to cut expenses by 25 percent. Then, by the summer of 2020, landlords were largely back to receiving normal rent payments.
This analysis pushes back against the narrative created by landlords that the eviction moratoriums were unbearable. Over the last year and a half, they have argued that tenants failing to pay their rent were creating a financial burden and that necessary costs to property ownership would continue leaving landlords holding the bag. What this study finds is that landlords largely had many avenues to cutting costs.
The researchers write that “since expenses fell more than rental revenues, and rental revenues recovered more than expenses did in June, overall balances were higher during the pandemic.” Expenses include things like deferring mortgage payments under widely available forbearance programs and putting off maintenance costs. To put some more numbers on it: In May 2020, landlord balances were 11 percent higher than what was observed in May 2019. In June 2020, landlord balances were 25-30 percent higher than in June 2019, and that trend persisted through May 2021 where “revenues are down 3.6 percent and expenses are down about 5.5 percent.”
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This money in the bank might not stay there — deferred mortgage payments will need to be paid at some point, and some maintenance is necessary and will likely be pursued as things normalize in the next few years. Further, the JPMorgan Chase data suggests that, in particular, landlords in New York City, Miami, and San Francisco sustained harder losses due to declining rents in central cities over the course of the pandemic.
But the analysis undermines the narrative about the plight of the small landlord during the course of the pandemic. Last November, I wrote about concerns that small landlords not receiving rental payments could undermine America’s dwindling stock of affordable housing if they were pushed to sell or close down their properties after months of nonpayment:
This means that renters of small properties tend to be poorer and tend to work in industries that were most harmed by Covid-19 — food service, retail, and construction to name a few. On top of that, the landlords they rent from are some of the least capable of absorbing the loss of income from unpaid rent. Many of these landlords have mortgages of their own, and all of them are required to maintain their properties — which means operating costs continue even as rent payments decline.
While some individual landlords very well could have struggled, this research indicates that many kept themselves in a reasonable short-term financial position. Even as they did so, many landlord groups fought hard to end tenant protections, arguing that eviction moratoriums imposed an unfair cost on landlords.
The National Apartment Association (NAA), a trade organization that includes the owners and operators of millions of rental units, fought hard against the moratorium, claiming it would “devastate the apartment industry.” The argument against the moratorium (which only restricted landlords’ ability to evict for nonpayment of rent, not for other causes like violating lease terms) was that it was imposing an undue cost.
In addition to noting his organization’s long-held support for emergency rental assistance, NAA President and CEO Bob Pinnegar argued in a statement that “the rental housing industry runs on extremely narrow margins ... many throughout the industry may have cut costs to remain afloat for the past 18 months, but operational expenses did not cease.”
While deferred costs still need to be paid at some point, there is tens of billions of dollars in federal aid awaiting landlords in the form of federal rent relief. While distribution has been slow, this money will likely eventually be distributed and landlords have many avenues to ride out financial instability. However, a recent survey showed that roughly 40 percent of landlords were still unaware of federal rental assistance (which they are allowed to apply for as well in the vast majority of programs).
The JPMorgan Chase analysis points to survey data revealing that landlords cut expenses often by cutting maintenance costs. Importantly, tenants living in these properties were the ones experiencing the immediate reduction in standards of living due to deferred maintenance, not landlords.
Given all of this, the argument against the federal eviction moratorium appears weaker than ever — tenants, who by all accounts overwhelmingly made their rental payments, were the ones living in buildings that landlords had reduced maintenance on.
The research also indicates the importance of all the federal relief programs like the stimulus checks, mortgage forbearance, and expanded unemployment insurance, which helped stave off what would have been a much worse year for tenants and landlords alike.
Ensuring that the owners of affordable housing units continue operating those properties is an important policy goal. However, the eviction moratorium, which prevented over a million eviction filings, doesn’t appear to have stood in the way of that.
