Southern California Housing Providers Lost $3.8 Billion in Unpaid Rent Since the Start of Pandemic
Housing providers in San Diego and Riverside counties lost a significant amount of rent since the start of the pandemic in March 2020 – a total of $3.8 billion, according to a new study conducted by the Fermanian Business and Economic Institute (FBEI), at Point Loma Nazarene University, looking at the current state of rental housing in the region.
Missed rental payments were experienced by half of the housing providers surveyed. Across units with sizable rental payment lapses, an average of five months of rent remains due, totaling approximately $5,000 per unit.
The study found that despite the financial hardship of missed payments, property managers made significant efforts to ease tenant obligations and keep renters housed.
- 53% of housing providers negotiated temporarily reduced rental rates
- 47% of housing providers agreed to waive late fees and penalties
- 32% offered a payment plan
- 15% removed the penalty for early lease termination
- 11% offered rent forgiveness
Impact of Eviction Moratoriums
More than 8 out of 10 housing providers surveyed said the federal and state moratoriums had the unintended effect of incentivizing renters without income losses to stop paying rent – creating an immediate financial burden for property owners, delaying much needed maintenance, and building a larger financial backlog for residents to make up now that the policies have ended.
Rental Assistance Programs
After rental assistance programs were introduced, many housing providers tried working with residents to fill out the necessary paperwork. Nearly half of the housing providers surveyed experienced considerable difficulty getting cooperation from tenants in securing rent relief. When they did receive it, it was – on average – less than half of the rent due.
A majority (55%) of housing providers received funds from one of the following programs: the County of San Diego COVID-19 Emergency Rental and Utility Assistance Program; the City of San Diego COVID-19 Housing Stability Assistance Program; the City of Chula Vista’s Emergency Rental Assistance Program; and the County of Riverside United Lift Rental Assistance Program. Across all programs, the major complaint from landlords involved the slow or burdened disbursal of funds.
What can be done to enhance rental assistance programs and processes for residents and housing providers in the future? The study revealed the need for numerous improvements:
- Enhance web design
- Shift the application filing to landlords
- Simplify application procedures
- Raise income limits
- Accelerate fund disbursement
- Improve communications
- Strengthen fraud protection
An Encouraging Outlook
Southern California fared better than many other areas nationwide and the research indicates the financial outlook for the region is improving. Since March of last year, 86% of San Diego County tenants and 84% of Riverside County’s paid their rent. Falling unemployment has strengthened tenants’ ability to catch up on or continue making rental payments.