At the beginning of the COVID-19 pandemic, many observers had dire predictions about what would happen to apartment rents.
"If you go back to when this started in March, by the summer people thought the situation was going to implode and rental collections would not be where they were," says Evan Blau, partner at Cassin & Cassin LLP, a NYC – Resident Law Firm and Head of Lending and Affordable Housing Agency. “So the can was repeatedly thrown off positively. Everyone thought this was going to be a catastrophic event. "
While Blau, the lender in financing apartment buildings through the Fannie Mae and Freddie Mac programs, believes the rental payments were better than expected, he notes that the tenants received help.
"A lot of things support that," he says. “Obviously we had the CARES Act [Coronavirus Aid, Relief and Economic Security Act], which subsidized many unemployed people to some extent. The government has responded through various initiatives, such as the Paycheck Protection Program [PPP] loans for small businesses. But these things are starting to go away now. From this perspective, I think the rental collection will decrease. "
If the rental collections fall, Blue wonders what the federal response will be. "They did things to help people avoid evicting tenants," he says. “But if rental income falls, how can you help the owners? So this is the great stranger. "
Despite the inability to finalize a new stimulus deal and the Supreme Court battle, Blue remains confident that help is on the way if the rental collections crash.
When evictions are prohibited, the hands of the owners are tied. Blau believes policymakers will recognize that homeowners need help.
"If there is a need, or a property level, or a tenant-related problem, the government has responded," says Blau. Law. "If it switches to the landlords, what will the government's reaction be?"
Blau is concerned that the economic disaster forecast at the start of the COVID crisis in March will become a reality without federal help.
"If things go down and the rental collections go down and there is no reaction, they will keep going down until the originally predicted economic impact becomes a reality," says Blau.
With a little more help from Washington, Blau is confident that the economic situation for landlords and tenants will improve.
"I think as long as we take it slow, you will see economic growth," says Blau. "You will start to see stability in the stock market and in various asset classes. People will be traveling again and going to hotels. I think that will help stimulate economic activity in all sectors."
