Urban Wire Renters Living in Units Owned by Mom-and-Pop Landlords Are Struggling to Pay Rent More Than Those Living in Large Multifamily Buildings
Jung Hyun Choi, Laurie Goodman, Daniel Pang
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housing development

Buildings with fewer than five units account for about half of all US rental units (PDF). Units in these buildings, especially in two-to-four-unit buildings, are more affordable than units in larger multifamily buildings, and owners of these units are more likely to be mom-and-pop landlords rather than institutional investors. These independent owners often don’t have deep pockets, and they’re more likely to struggle financially during economic challenges. Despite the importance of this housing sector, rent payment data for buildings with one to four units haven’t been available.

Some survey data, including from the Census Bureau’s Household Pulse Survey and the University of Southern California’s Understanding America Study, track household rental payments, but their sample sizes are small, and we often find mismatches between housing payment numbers in the survey data and in the administrative data.

The only publicly available administrative rent payment data are provided by the National Multifamily Housing Council (NMHC), which tracks monthly rental payment information for 11.7 million units of professionally managed apartment units. The NMHC data cover about one-fourth of all rental properties in the US, but the sample is concentrated in the high end of the market and units in large multifamily buildings, leaving out tenants with low incomes living in rental properties with fewer units.

To address the lack of data in this space, Urban has partnered with Avail—an online platform that serves independent landlords—to create a new feature that tracks rental payments to mom-and-pop landlords over time nationally and in selected states and metropolitan areas. This tool sheds light on which landlords and tenants are financially struggling, the impact of government emergency aid and related policies on people’s ability to pay rent, and where growing disparities are emerging.

Renters living in units owned by mom-and-pop landlords are less likely to pay rent on time

Before and during the pandemic, a large share of tenants living in buildings with fewer units was struggling to pay their rent. Avail data show that fewer renters living in units owned by mom-and-pop landlords paid their rent on time compared with those living in larger multifamily buildings. Overall, between January 2020 and August 2021, the share of renters who paid their rent by the end of the month was 6 to 9 percentage points higher in the NMHC data (larger multifamily buildings) than in the Avail data (buildings with one to four units owned by independent landlords).

Avail also provides rent payment information for renters with the lowest 20 percent of rent costs, which shows trends for renters with lower incomes living in properties with one to four units. We find this group is least likely to pay rent on time: the share of renters with the lowest 20 percent of rent costs who pay rent on time is 3 to 4 percentage points lower than all renters in the Avail data and 8 to 12 percentage points lower than renters in the NMHC data.  

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The Avail data show a dip in rental payments beginning last April, soon after the virus started spreading in the US. Quick government action to distribute stimulus checks and unemployment benefits helped stop that downward trend and helped many tenants pay their rent on time. But renters with the lowest 20 percent of rent costs have experienced a noticeable drop in their ability to make on-time rental payments since April 2021, showing that this group needs additional attention.

Rent payment rates vary across states and metro areas

Our tracker includes data for 17 states and eight metropolitan statistical areas (MSAs), with additional places likely to be added in the coming months. Using these Avail data, we can compare rent payment data between states or between MSAs.

We find that the share of renters in California living in smaller properties who make their rent payments has been higher than in other states. The share dropped in April 2020 at the onset of the pandemic but has quickly recovered back to the prepandemic level. But the numbers in the most recent four months have been steadily declining, coinciding with the onset of the Delta variant. This falling rent payment rate shows why a quick distribution of emergency rental assistance is critical.

In Georgia, the share of people making on-time rent payments was already low before the pandemic, and the pandemic’s impact in April 2020 was limited. Although on-time rental payments climbed during some months last year, the share of renters who made their payments has fallen since October 2020, as the effects of the additional $600 federal unemployment insurance benefits in April through July started to dry up.

In Texas, the share of on-time payments dropped about 3 percentage points in April 2020, and there has been a small improvement since. Pandemic-related business shutdowns were more limited in Texas than in many other states, which could have led to less fluctuation in rent payment rates.

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Among MSAs, we found that the share of renters who made their payments in Washington, DC, increased last summer and fall, coinciding with the rollout of the additional unemployment insurance benefits. The numbers have dropped since then but are still similar to the prepandemic level and higher than in other MSAs. Notably, the share of renters who made their payments over the past few months has increased, potentially because Washington, DC, has dispersed a higher percentage of emergency rental assistance money than most other MSAs.

Chicago’s rental payment rate was similar to Washington, DC’s before the pandemic, but it is now much lower. In contrast, New York City’s rental payment rate, which was lower than Chicago’s rate before the pandemic, has been stable throughout the pandemic. One partial explanation for this trend could be the fact that New York City has rent control and rent stabilization laws covering about 45 percent of rental units, which are disproportionately owned by mom-and-pop landlords. Renters in these units may have taken more extraordinary measures to avoid losing these units.

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Tracking rent payments can help policymakers and practitioners better understand renters’ and landlords’ needs

These data show that federal pandemic assistance helped many renters keep up with payments, and some places that have distributed emergency rental assistance more quickly are seeing higher rental payment rates. But many renters, especially those with low incomes and those living in places slow to distribute emergency rental assistance, are experiencing significant challenges in paying rent, which could put them at risk of eviction. Our prior research found that most mom-and-pop landlords and tenants living in their properties are unaware of emergency rental assistance, indicating that more work is needed to reach these groups.

With the distribution of emergency rental assistance funds slowly picking up and the national eviction moratorium ending last month, real-time data that reflect the financial health of renters is critical. Our tracker, which will be updated monthly, can help policymakers and those working on the ground help struggling renters by tracking areas where more work is needed to help these renters stay housed.

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Research Areas Housing Housing finance
Tags Housing affordability
Policy Centers Housing Finance Policy Center
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