With more than 5 million confirmed cases of COVID-19 in the US and little relief in sight, it’s possible that the impact will continue well into the future. TransUnion has continued to track important trends that impact the multifamily industry. Our goal is to help you make informed decisions.
This study looks back to the first 90 days of the pandemic from April to June.
The TransUnion Multi-housing Financial Impact Study examined emerging trends to understand how this rapidly evolving situation is impacting credit performance and if early indicators of financial hardship are signaling future concerns about renters’ ability to pay their bills. The analysis includes insights from more than 2.4 million renters in our database.
For up-to-date insights and to view all of the monthly Multi-housing Financial Impact Studies, visit our Resource Center.
Are consumers more worried about their ability to pay rent?
While a significant portion of consumers whose income has been impacted by COVID-19 say they are concerned about their ability to pay rent, the number is declining month-over-month. In April of this year, 32% were concerned. In May, that number dropped 2% and showed a further decline in June at 26%. That’s a 6% decline over the 3-month period.
While one might assume the drop in concerns might be attributed to the fact that more consumers are cutting back on discretionary spending, the opposite is true. In April of this year, 60% of those surveyed say they are curtailing spending. In May that number fell to 55% and again in June to 52% — an 8% decline from April through June.
Opened new trade lines
Are renters taking on new forms of debt as a response to COVID-19? The percentage of renters that opened a new trade line in the past 6 months continued its downward trend, decreasing by 3.2% points from April to June (36.7% to 33.5%). This also represents a 5.9% decrease when compared to June 2019.
Credit card utilization
Among renters, credit card utilization rates have been decreasing month-over-month across the entire portfolio. As of December 31, 2019, the average renter was utilizing 45.3% of their available credit on credit cards. As of June 30th, utilization rates fell to 37.2%, which represents a 17.8% decrease year-to- date and 11.6% decrease when compared to June 2019.
We see this trend in utilization rates across all property types and all regions.
Early indicators of financial hardship
More than one in four renters (25.5%) had at least one account that is 30 or more days past due in May.
Year-to-date, the percentage of consumers with at least one account in serious delinquency is down 4% and is comparable to this time last year with only a 0.9% increase year-over-year. Additionally, 30 day delinquencies, which can act as the earliest indicator of financial hardship, are down 1.8% year-over-year.
As a delinquency metric this can be an indicator of financial hardship, although many consumers are able to bring their account back into good standing before becoming seriously delinquent (typically 90 days past due or greater).
Rent payment tracker
How are these indicators impacting the number of renters who are paying on time?
According to the National Multifamily Housing Council, which defined late payments as those not received by the sixth of the month. Interestingly, the number actually declined year-over-year but increased from April to June of 2020.
In April of this year, the number of trade lines in acute relief increased 24.5% month-over-month, representing 12.5% of all trade lines. While the total number of trade lines in acute relief quickly dropped back down to 9.8% in May and June, non-mortgage and student loan trade lines continued to rise. Additionally, the percentage of renters with at least one trade line in acute relief remains at elevated levels. We have seen this trend across all property types and geographical locations.
Navigating through difficult times
We'll continue to keep you updated on the latest numbers, trends and what they could mean for you.
Take charge of how hard your properties will be hit
No matter where the next few months take us, the key to off-setting the damage of the pandemic is to reduce your risk. It starts with doing your homework. If you keep bad renters out, eviction-related costs will be lower. To verify applicant identity and mitigate fraud, TransUnion ResidentVisionSM provides easy-to-use tools and advanced analytics to make smarter decisions.