The tenants of River Ridge Apartments in Orlando, Florida, like so many other Americans stressed out and anxious over the fallout from the novel coronavirus, have been anxiously awaiting a certain letter in the mail. They’re looking forward to their $1,200 government checks that are supposed to help Americans get through the present economic hardship, including paying for rent.
The letters they received last week, however, sent the opposite message.
The resident’s landlord, ConcordRENTS, which also own several nearby buildings, wrote to inform them that their rent would be increased, starting April 15, according to a report from a local ABC station. A tenant with kids told WFTV that, despite increasing job losses and financial strife, her landlord felt it was time to demand higher monthly payments.
“There are people not working at all, and as we all know, there are issues with the unemployment system,” she said. “A lot of people can’t get onto it.”
Another tenant in a different ConcordRENTS-owned building, who was being asked to pay $925 a month instead of $880, told Fox35, “everyone is in survival mode right now. You shouldn’t have to stress out and worry about your rent increasing.”
The letter she received did note, however, that tenants like her could put their forthcoming relief checks toward rent.
”They’re putting us in a rock and a hard place,” she said of the owners.
While the entire nation has been impacted by the pandemic, Orlando, as well as a handful of other fast-growing U.S. cities, may feel the impact a bit more than most. It’s still too early to calculate the economic damage caused by the coronavirus; attempts to analyze the economies in New York City and Seattle have found little change, with the studies likely coming too soon to gauge long-term trends. But early economic analysis suggests that cities with relatively large entertainment and tourism industries are poised to feel the impact even more severely than others. In an echo of the Great Recession, cities in Florida and Nevada, representing some of the faster-growing housing markets in the country, are once again looking at substantial unemployment and strain on renters.
An analysis by the Brookings Institution predicts Las Vegas, Orlando, Miami, New Orleans, and Honolulu will be among the hardest hit large metro areas, owing to their dependence on entertainment and tourism, as well as smaller destinations such as Ocean City, New Jersey; Myrtle Beach, South Carolina; Flagstaff, Arizona; and the Gulf Coast of Mississippi and Alabama. Other analyses by economists at Apartment List and elsewhere have reached similar conclusions. The large, relatively low-paid workforce that serves these tourist towns has been among the first to get laid off in the era of social distancing. Not only do these servers and bartenders and other service workers earn little in the way of benefits, they may also be among the last to be rehired when the pandemic passes. In between their workplaces shutting down and reopening lay months of straining to pay bills—and, in turn, lots of strain on local housing markets.
Cities at Risk in Quarantine Economy
|City||Total Jobs||High-Risk Jobs||Percent of Workforce|
|City||Total Jobs||High-Risk Jobs||Percent of Workforce|
|Las Vegas, Nevada||818,987||209,026||25.5%|
|Oklahoma City, Oklahoma||567,366||79,842||14.1%|
|San Antonio, Texas||903,944||125,851||13.9%|
|New Orleans, Louisiana||454,651||62,276||13.7%|
|Los Angeles, California||4,993,184||678,593||13.6%|
|San Diego, California||1,223,679||162,513||13.3%|
Twelve percent more Americans didn’t pay rent in April versus March, according to data from the National Multifamily Housing Council, and Apartment List found that one in nine renters convinced their landlords to proactively lower rents. But renters already felt stressed before coronavirus. Rental costs have continued to rise. Single-family rental homes increased 2.9 percent last year, more than double the rate of inflation, per the CoreLogic Single-Family Rent Index (SFRI), and nearly 11 million renters across the country spend half of their income or more on housing.
In South Florida, where rents also increased last year, there are more cost-burdened renters than anywhere else in the nation. Slowdowns and shutdowns in construction due to coronavirus will mean less supply going forward, which will put an even bigger squeeze on affordable housing. And state leadership has failed to provide more support to low-wage workers, like the River Ridge tenants, according to an Orlando Sentinel editorial: Lawmakers have fought a $15-an-hour minimum wage and paid sick leave, and skimmed $2 billion from a statewide affordable housing fund.
“Nobody wants to be that guy who puts people out on the street, but many might not have that choice,” Tom Stravecky, a real estate agent with ERA Infinity Properties in Fort Lauderdale, told the Sun-Sentinel. “For now, everyone is just dealing with April.”
Las Vegas, where the Strip has gone dark as casinos take the unprecedented step of shutting down, may be hit even harder. An Apartment List analysis of workers considered at high risk of being negatively affected by the “quarantine economy” found a quarter of Vegas workers, notably those in the large local food-service and entertainment industries, met that distinction. Many have already lost work. Between March 14 and March 28, 11 percent of Nevada’s workforce filed initial unemployment claims.
“In times of economic uncertainty, tourism, recreation, and gambling are some of the first areas of discretionary spending that households cut back on,” the Apartment List report notes. “This is one of the reasons Las Vegas was hit so hard during last decade’s Great Recession, and it will be one of the reasons it is hit hard again by the quarantine economy.”
Both Orlando and Miami have similarly high shares of high-risk workers, 16 and 15.8 percent, respectively. And the long-term trends in these markets aren’t any more promising for low-wage renters. Over time, as the larger economic impacts of coronavirus reset the housing market, rents may fall, but income will likely fall more, according to David Shulman, a senior economist with the Anderson Forecast at UCLA.
The only segment of the market that may benefit is wealthy renters who still draw high salaries. As the fastest-growing segment of the rental market across the country, these renters have literally shaped supply, as builders and developers added more and more expensive rental units to the market. A predicted glut of high-end rentals will mean price adjustments, more rent concessions, and likely a lot of apartments priced at a steal compared to pre-recession pricing.
But those deals won’t help tenants at the ConcordRENTS apartments, who will likely be scrambling for relief, and employment opportunities, in the foreseeable future. They did, however, get one break. Shortly after news teams began questioning ConcordRENTS about the timing of the increase, they reversed course, explaining that rents wouldn’t be raised as long as tenants paid on time.