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Congress ended 2020 with a promise: $25 billion of rent relief for renters and landlords nationwide.
With states receiving aid proportional to their population, Bay Area residents have drawn the short end of the stick.
The “most” help is going west. Novogradac’s analysis estimates that $2.63 billion of federal aid is heading to California, nearly double that of the next highest states (Florida, New York). However, a huge renter population and high rent prices throughout the Bay Area lessens the impact of relief compared to lower-cost regions. The rents in the greater San Francisco and San Jose areas have dropped 26.7% and 15.2% throughout the pandemic and still have two of the highest national markets. Relief may prove helpful in the area short-term, but will still only represent a portion of backlogged rent.
The new law mandates the relief get distributed by January 26th unless revised. Local jurisdictions will be tasked to distribute the money, similar to the CARES Act. They have until the end of 2021 to allocate funds but will be pressured to do so sooner than later. Utility providers and landlords will receive the bulk of the aid, and low-income households will be the first tenant demographic to qualify. Eligibility requirements for these households can be found on Novogradic’s online Affordable Housing Resource Center.
The California state legislature could use the success of this policy as a reason to push out more housing relief. Both renter and landlord advocacy groups have been pushing for this since the start of the eviction moratorium. Neither group is to blame for the financial difficulties brought by the pandemic, which won’t see radical change from the most recent $600 stimulus package. More significant aid will allow tenants to cover their growing debts and alleviate the economic hardships that landlords have faced.
Check out The Mercury News’s article for more insight on the new rent relief package.
The eviction moratorium and tenant protections included in Assembly Bill (AB) 3088, set to expire on February 1, 2021, may continue through the end of the new year. Two bills would continue to prevent COVID-related evictions, for varying lengths.
Under AB 3088, tenants are not obligated to pay rent due between March 1, 2020 and August 31, 2020 if they are able to provide proof of a COVID-related financial hardship. For the period of September 1, 2020 through January 31, 2021, tenants must pay at least 25% of their total rent owed for this five month period to avoid eviction.
Under AB 15, proposed by Assemblyman David Chiu (D-San Francisco), the 25% rent payment threshold would continue through December 31, 2021. This bill would also waive preempted eviction protections, and allow local jurisdictions to enforce new eviction rules on top of existing state law.
Senate Bill 3, proposed by Sens. Anna Caballero (D-Salinas) and Steven Bradford (D-Gardena), would extend AB 3088 to the end of March 2021. In these two added months, lawmakers would take more time to review legislation and get a sense of how efficiently vaccines will be distributed throughout the state.
Landlords have actively opposed the extension. However, both bill’s authors have stated that their respective bills will provide relief for landlords as well. If done right, this would provide financial aid for COVID-burdened renters and property owners alike. Keep an eye out for which bill passes at the beginning of 2021. The eviction moratorium will be the most pertinent conversation in the California multifamily industry until the pandemic subsides.
Check out this Sacramento Bee article for further information
Considering the ever-changing nature of the economy’s recovery status, those with a stake in the multi-family housing market need to remain adaptable and responsive to new developments.
With the help of CoStar/Apartments.com’s most recent State of the Market Report, we hope to provide apartment owners with a comprehensive picture of the status of the Bay Area’s apartment housing market that factually depicts what’s happening, why it’s happening, and where we go from here.
Freshly signed by Governor Newsom, AB 3088 has updated protections for pandemic-impacted tenants in California. Burdened renters are still protected, but not all are completely exempt moving forward.
All California landlords should have provided an informational notice to tenants who’ve missed rental payments during the COVID-19 pandemic before September 30th, 2020. If you failed to provide this notice, you may not be able to evict your tenant or recover rent.
If the notice was delivered, landlords cannot evict a tenant for non-payment of all charges filed between March 1st 2020 and August 31st 2020. The tenant must have provided a statement claiming COVID-related financial hardship. High income tenants (>$100,000 household income) must provide additional proof.
Ignored payments due between September 1st, 2020 and January 31, 2021 CAN lead to eviction. If the tenant DOES NOT 1) provide formal declaration of pandemic induced financial hardship and 2) Pays 25% of the rental payments due between September 1 2020 and January 1st 2021 in full.
The 25% can either be paid regularly (25% of monthly rent paid each month) OR in lump sums (25% of TOTAL rent due between September and January is paid by January 31st, 2021.
Owners must deliver a 15-day notice (not including weekends and holidays) before seeking out an eviction under these terms.
Do you have a strategy in place to handle these notices? If not, it’s time to get in gear. Has your current property management company informed you on their new strategies with AB 3088 in place? If not, it may be time to pivot.
A recent article by Louis Hansen of the San Jose Mercury News details the lasting effects of the COVID-19 pandemic on the Bay Area housing market, and how they’ve caused local rent prices to nosedive.
Housing demand in the area is hitting historic lows, and the urban areas can no longer rely on the influx of tech-employees to fill vacant units.
Apartment List’s Fall Rent Report shows that no Bay Area submarket has escaped the virus’s impact. Monthly rent has dipped 6.3% in Fremont, 7.9% in Oakland, 9.5% in San Jose, and a staggering 17.8% in San Francisco.
A multitude of factors have contributed to these trends. Hansen states, “Remote work has reduced the need for apartments near tech and professional offices, and increased demand for more home space for video conferencing and the ever-elusive balance between job and home. The recession has hit hard on service workers and others unable to work from home, causing some to leave the Bay Area to move back with family or cheaper spaces.” Sacramento and Salinas are benefiting from the scramble, with median rent prices in these cities steadily rising since March of this year.
Despite this, Bay Area rents remain high. The median price for an apartment $2,590 in San Francisco, $2,170 in San Jose and $2,090 in Oakland. Landlords in these cities are attempting to soften the blow by giving virtual tours, offering rental reductions, and even agreeing to stretches of rent-free months to lower their vacancy rates as quickly as possible.
How the market will adjust when the pandemic lightens up is unknown. The Bay Area housing market has historically been a safe haven for investors, but the increasing remote work flexibility appears here to stay. Will the Bay Area residents continue to bargain hunt elsewhere, or will the culture and community that office and urban life create cause people to storm back?