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Update: The Impact of COVID-19
#35 — November 10, 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—November Rent Collections Continue Decline Started in September, Indicating Additional Stress for Residents and the Affordable Housing Industry
Cumulative total receipts are at 81% as of November 9, 2020. Cumulative total receipts are:
  • down (2%) compared to October 2020 through the 9th.
  • down (1%) compared to September 2020 through the 9th.
  • down (4%) compared to August 2020 through the 9th.
  • down (9%) compared to March 2020 through the 9th.
In terms of types of properties or receipts:
  • Resident receipts are at 81%, which is up 1% compared to October through the 9th and up 2% compared to September through the 9th. They are down (1%) compared to August 9th, and down (9%) compared to March, the most recent month in which the 1st fell on a Sunday.
  • Subsidy receipts are at 79%, which is down (9%) compared to October through the 9th and down (11%) compared to September through the 9th. They are down (13%) compared to August 9th and down (11%) compared to March.
  • Senior total receipts are 94%, which is down (1%) compared to October through the 9th and up 2% compared to September through the 9th. They are down (3%) compared to August 9th and down (2%) compared to March.
  • Family total receipts are 79%, which is up 1% compared to October through the 9th and up 2% compared to September through the 9th. They are down (1%) compared to August 9th and down (10%) compared to March.
The chart below shows the distribution of properties on their collection performance in November through the 9th. Out of the 202 properties, 26 have collected less than 63% of November charges representing $0.6M remaining to collect while 32 properties have collected over 95% representing $0.1M 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.

NMHC highlights the multifamily housing issues we are facing today, including how the industry has been impacted, the struggles of consumers, the apartment industry performance metrics, and the future uncertainty without additional government relief. NMHC states that although their monthly rent trackers provide some insight into the issues the industry is facing, they only represent 52.2% of the industry, whereas Census Household Pulse Survey data shows that renters are largely paying, but are still facing financial struggles.

As of October 27th, NMHC’s rent tracker found that 94.6% of apartment households made full or partial payments. This is a 1.2% decrease from the same time last year and compares to 92.2% collected last month. NMHC President, Doug Bibby, states that they are continuing to “urge lawmakers to come together and pass meaningful assistance to support renters and keep America’s rental housing sector stable.” 
Housing & Employment News
As more people are working from home during the pandemic, The Wall Street Journal says that with no commute employees spent more than 22 million extra hours on their primary jobs. As commuting hours dropped by an estimate of 60 million hours, a study of census and survey data found that of that extra time, primary jobs took up 35.3% of that time. As employees gained more time removing their commutes, employees state they are working less (32 hours during the pandemic versus 36.4 before the pandemic). Nichols Bloom, an economist at Stanford University, who worked on the study, said, “They say they’re not working when they talk to their spouse or their kid on a break between Zoom calls, but they may be no less productive than they are when they talk to a colleague about the football score.”

The expiration of eviction moratoriums could lead to the next housing crisis as many renters have not been able to pay all or some of their rent since March. The Federal Reserve of Philadelphia study calculated outstanding rent could reach $7.2 billion by year end. Moody Analytics also calculated that nearly 12.8 million Americans owe on average $5,400 in missed rent payments. According to census data, “women and people of color are disproportionately more likely to owe rent.” Many renters have moved to putting payments on credit cards, which could harm renters’ credit long term.

COVID-19 is exacerbating the divide between those whose employment has been impacted and those whose employment has not been impacted. Reuters chronicles two families in Columbus, Ohio, impacted by COVID, one of whom could face eviction and one whose real estate business is booming. As Reuters notes, “Economists call this phenomenon a ‘K-shaped’ recovery, in which those on the top continue to climb upward while those on the bottom see their prospects worsen.”

Westminster Management, an apartment company owned in part by White House Advisor Jared Kushner, has submitted hundreds of eviction filings, although tenants cannot yet be evicted in the state of Maryland. Experts point to the filings as an example of the looming threat of mass evictions if pandemic aid is not renewed.
Pandemic News
Reported coronavirus cases reached 100,000 in a single day for the first time in the US this past week. Seven states say increases of more than 45% in their seven day rolling averages, including Minnesota and its neighboring states of Iowa, North Dakota, and South Dakota. As cases spiked, voters were hitting the polls to determine who best aligned with their view of how to handle the virus.

Concerns have arisen about the use of rapid antigen COVID tests on asymptomatic people. The $5 BinaxNOW tests looks for the viral proteins but can miss those infections that are more detectable by polymerase chain reaction tests, or give false positives. The Louisiana Department of Health advised that anyone taking the BinaxNOW tests should be advised of its limitations. The FDA also issued an alert warning that antigen tests can “produce incorrect positive results.”

The University of Washington’s Institute for Health Metrics and Evaluation (IHME) found that universal mask wearing could save about 130,000 lives by February 2021. The study, published in Nature Medicine, found that if 95% of the country wore masks that instead of losing 511,000 people, we’d lose 381,000. Even if only 85% of Americans work masks, we could save 96,000 lives.

Nursing homes have been hit the hardest by COVID-19, but nontraditional nursing homes are faring far better with few if any cases. Residents in these nontraditional models, are 1/5 as likely to get coronavirus compared to normal nursing homes. The “Green House” model allows residents to live “in groups of eight to 10 in settings that resemble homes rather than hospitals.” This has proven effective at minimizing the spread of the virus.

The November 6th episode of the Osterholm Update: COVID-19 discusses record-breaking case numbers in the US, public trust in science amid the COVID-19 pandemic, expectations for vaccines, more details related to bubbling, and the risks associated with gatherings.
IHME has changed their daily infections and testing to project the trajectory of infections based on easing mandates and closures and universal mask wearing.
Economic News
SunTrust’s Interest Rate Derivatives Market Update highlighted the surging COVID case count in the US and globally, as well as the US economy surpassed expectations growing at 33.1% annualized quarter over quarter. American incomes increased in September more than anticipated, which helped drive spending at the end of 3rd quarter.

Harvard Business Review discusses how the global economy is recovering faster than expected by examining several factors. Examining various recession types and the drivers of such recessions, and the impact of COVID on these types, helps frame the recovery. Three dimensions of economic recessions that are used to help frame the COVID recovery; recession nature, policy response, and structural damage. Examining the sectors that were and were not affected by COVID and how it could all go wrong.

The US economy grew in Q3 after nearly $3 trillion of pandemic relief from the government help fuel consumer spending. Although the economy outperformed projections, it remains 3.5% below its level at the end of last year. Consumer spending alone contributed to 76.3% of the GDP increase. However, with no additional funding from the government on the horizon, it is unclear how businesses and consumers will fair in the next quarter as only half of the 22.2 million jobs lost since the beginning of the pandemic have been recovered.

Bloomberg’s recovery tracker shows how sectors of the US economy are recovery at different paces. While the financial markets and new job postings are seeing strong recovery, for example, energy and steel demand remain depressed. Notably, new COVID-19 cases and deaths continue to increase, which has the potential to reverse gains seen in employment and consumer comfort.

The Federal Reserve maintained its pledges to keep rates low until three thresholds are met: evidence of a tight labor market, 2% inflation, and forecasts that inflation would run moderately above 2%. Federal Reserve Chairman Jay Powell said the economy has continued to recover from its Q2 depressed levels, but that the pace has slow and continued recovery depends on levels of fiscal stimulus. In addition, the Fed expanded its Main Street Lending Facilities to loans as low as $100,000 and waives fees for loans less than $250,000.

The US Economy added 638,000 jobs in October, following 672,000 in September, according to the Bureau of Labor statistics, and the unemployment rate fell one percentage point to 6.9%. US jobs remain 10 million below pre-pandemic levels. Some economists caveat the news of the improving labor market with cautions over the effect on employment rising COVID cases may have on employment in November.

Many employers have been surprised to find difficulty in finding new hires amid mass unemployment caused by the pandemic, in a phenomenon referred to as the “COVID Paradox”. The effect seems to be driven by additional stressors placed upon would-be workers, including increased childcare responsibility, add physical and mental health risks of working during a pandemic. The article notes that difficulty finding workers has persisted even since the expanded unemployment benefits expired in July.
Other Interesting & Helpful Resources
Cruises in US waters will not resume until 2021 according to the Cruise Lines International Association who extended the voluntary suspension after it expired on October 31st. This suspension is providing time for the industry to implement safety protocols as well as plan a four-phase return to operations. This includes mandatory testing and capacity limits, and participating in mock voyages to test health measures.
State-by-State Actions
Schools: Education Week
Reopening & Closing Status:
Construction Limits:
As stadiums across the country sit empty due to the coronavirus pandemic, many are rethinking how to make money and retain jobs by creating new socially distanced experiences. Since many are not able to host large crowds, they are utilizing their space differently by setting up animatronic dinosaurs for a “Jurassic Quest” safari or creating large outdoor movie venues or even drive-through holiday light displays. Some are even airing games on outdoor screens with socially distanced pods set up for fan viewing.

The school shutdowns in March upended children’s and families’ lives, but even more so for children with developmental disabilities. The Wall Street Journal chronicles the struggles of one family with an autistic son who was suddenly without the support of 17 people from physical to speech to behavioral therapists and teachers. His parents, Ziggy and Sara Hood, tried to mimic as much of school as they could and take turns caring for their children. Ziggy is hoping to play one more season with Washington before he retires and is currently staying home with his sons, while his wife works the “second half of [her] workday” from 8pm to 2am.

Kindergarteners learn best by doing, but this year over 2 million of them are starting school in front of their computers leaving experts to worry about how this could affect them long term. Going into next year current kindergarteners will be underprepared, and those in lower income communities will be disproportionally affected. More than one third of kids are attending classes in school a few days a week or every day. Safety concerns of children bringing the virus home and giving it to their caregivers is top of mind for educators.

The 2020 Major League Baseball season saw its ups and downs, but the upcoming offseason will see payroll decrease as well, something that was anticipated since the start of the season. Talks at the beginning of this season were contentious and talks for the next pandemic affected season are poised to be the same. The players union will not entertain discussions of pay cuts this year.

The Wisconsin versus Purdue football game scheduled for November 7th has been cancelled due to an outbreak among Badger players, coaches, and staff. This is the second cancellation for Wisconsin due to rising cases. Because of the short football season, neither game will be made up. According to Big Ten rules, any player that test positive must sit out for 21 days at minimum. Due to missing two games, Wisconsin could end being ineligible for the Big Ten Championship.
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.

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