While some California renters are still struggling to make ends meet, many are experiencing a robust financial recovery as the economy bounces back from the COVID-19 pandemic, according to new research from Beacon Economics.
The research, produced by Beacon Economics and published today by the California Apartment Association, comes as California fully reopens its economy and as lawmakers consider whether to extend the state’s pandemic-related eviction moratorium.
Beacon’s report, The Economic Condition of Renters in California and Beyond, indicates that California renters, thanks largely to the strong economy going into March 2020, are well-positioned for an economic rebound. It calls into question the need for another lengthy extension of eviction restrictions.
“Prior to the pandemic, renters across the country achieved the strongest economic health in almost two decades as debt, leverage, and late rent payments sank while checking account balances surged,” says the report, citing data from the U.S. Federal Reserve’s Distributed Financial Accounts and Survey of Consumer Finances. “U.S. Census Bureau Current Population Survey estimates indicate that this trend held for lower-income groups in California.”
Tenant groups and some legislators are pushing to extend and expand the eviction ban under SB 91 at a time when renters across the state are returning to work, children are preparing to return to classrooms, and as federal rental assistance checks are arriving in mailboxes.
The unemployment rate for California renters, while elevated at 10.25%, already is lower than it was from 2008 to 2014, a period that did not include government-imposed eviction bans.
“Beacon Economics believes unemployment will continue to drop with the help of expansionary fiscal support along with a strong recovery in consumption as households tap savings that built up during the pandemic,” the report says.
Late rental payments have dropped from 20.7% at the height of the pandemic to 11.8% last month. And while national rent debt is estimated at $6.7 billion, the federal government has set aside $46.6 billion for rental assistance — more than enough to wipe out all rent debt.
Unfortunately, not all rental housing providers and tenants are taking advantage the rental assistance or have found the application difficult to complete. The state has now simplified the application process in hopes that more renters will apply.
“The money is there, but it’s not getting into the hands of the people who need it quickly enough,” said Tom Bannon, chief executive officer of CAA. “Because of these difficulties, CAA is open to a brief extension of the eviction moratorium, but the state needs to take steps to stop abuses. For more than a year, too many tenants with the means to pay have withheld their rent simply because they could do so without consequences.”
Bannon said any extension of SB 91 must include safeguards against abuse. We cannot extend protections for tenants who have failed to provide their landlord with a COVID declaration of hardship and who have failed to apply for government funding to cover the rent. We also need funding for landlords who have tenants who have left in the middle of the night owing thousands of dollars in rent.
“We need to close that gap,” he said. “If a tenant truly can’t make the rent because of a pandemic related hardship, that person deserves rental assistance, and so does their housing provider.”
ABOUT BEACON ECONOMICS
Founded in 2007, Beacon Economics, an LLC and certified Small Business Enterprise with the state of California, is an independent research and consulting firm dedicated to delivering accurate, insightful, and objectively based economic analysis. Employing unique proprietary models, vast databases, and sophisticated data processing, the company’s specialized practice areas include sustainable growth and development, real estate market analysis, economic forecasting, industry analysis, economic policy analysis, and economic impact studies. Beacon Economics equips its clients with the data and analysis required to understand the significance of on-the-ground realities and to make informed business and policy decisions. Learn more at www.BeaconEcon.com
ABOUT THE CALIFORNIA APARTMENT ASSOCIATION
The California Apartment Association is the largest statewide rental housing trade association in the country, representing over 50,000 single family and multi-family apartment owners and property managers who are responsible for over 2 million affordable and market rental units throughout the State of California.