The pandemic struck in March and jobs disappeared soon after because of the need for social distancing. Thousands have filed for unemployment, and without money coming in, people are struggling to pay rent.
In March, Gov. Jared Polis signed an executive order asking landlords and property owners to not evict people. At the end of April, he banned evictions all together.
But there’s no specific aid for landlords and people who pay mortgages. People who rely on their rental properties for income are in a tight situation, with the cascade of job losses now threatening their own financial stability.
Tim Rhodes and his family operate six properties with 400 rental units in total in Colorado Springs. This has been his primary income for more than 20 years. Two months into the pandemic, he said he’s already lost about 12 percent of his typical revenue.
Rhodes said working families make up a big portion of his tenants. Some worked in restaurants, one of the hardest-hit industries, and a lot of his tenants are coming up short on money for rent. He’s tried to work with them, including accepting late rent, waiving late fees, checking in more and promising not to raise the rent this year.
“I have lost sleep over thinking about my family, my business, and people that depend on me for their livelihoods,” he said. “It’s definitely stressful.”
As much as he’s trying to meet his tenants halfway, he has bills to pay of his own.
Landlord's mortgages can have a ripple effect on the economy
In Colorado, it’s not necessary to register with the state if you would like to rent out a property so it’s difficult to gauge the exact number of landlords in the state. According to census data, Colorado’s homeownership rate is about 65 percent, including but not limited to landlords.
Jennie Rodgers is the Denver market leader for Enterprise Community Partners, a nonprofit designed to encourage affordable housing development. She is worried that without intervention, it’s only a matter of time before things get worse.
“We could see foreclosures on many multifamily properties,” Rodgers said. “Depending on when landlords have purchased their property and their debt, those properties could go into foreclosure.”
That could make an expensive housing market even tighter. About half of renters in the Denver metro area were “cost burdened” as of 2018, meaning they were paying at least 30 percent of their income for rent.
Those figures have climbed over the last decade for people earning less than $45,000, according to data compiled by the Joint Center for Housing Studies of Harvard University. With many still out of work, rent could quickly eat up those savings.
The state is short about 115,000 affordable rental homes for low-income renters, according to the National Low Income Housing Coalition. the median rent in Denver has climbed by about 75 percent since 2011, though the rate of growth has slowed.
Elena Wilken, the director of the affordable housing advocacy group Housing Colorado, thinks housing may get more expensive for everyone. A lot of investors decided to stop building altogether during the financial crisis of 2008 and it helped further a housing scarcity.
“They just didn't build housing for either multifamily or single family for several years,” Wilken said. “We actually had never recovered the same pace of building homes that we had before.”
If more landlords lose their properties due to the pandemic, that could get worse.
Mortgage delinquencies are on the rise
The latest data shows Colorado has some of the lowest delinquency rates in the country, with only about 2.5 percent of all loans going into delinquency in the first quarter of 2020. That’s a slight decrease in the last quarter of 2019, according to the Mortgage Bankers Association.
That first quarter only includes January to March, the very beginning of the crisis. The current quarter’s numbers are likely to be worse, according to the association’s chief economist Mike Fratantoni.
Landlords say they are worried about making mortgage payments with rent delayed or non-existent because of social distancing. Nationwide, late payments on mortgages overall have risen in 2020, although it’s not clear how hard hit landlords in particular are.
On the national scale, there is a sharp increase in people missing one payment, which aligns with the beginning of the pandemic in March.
Economists say things should get better as people go back to work and catch up on missed payments.
Still, Frantatoni expects things to get worse before they get better. He said he thinks delinquencies and unemployment will reach a peak likely within the next few quarters.
“So it'll still probably be the end of 2021 or later before we get back to normal,” he said. “But, if the virus is contained and these reopenings are successful, both from an economic and a public health standpoint, then perhaps we're past the worst.”
What help can landlords get?
If a homeowner or a landlord has a federally backed loan, lenders are not allowed to foreclose properties for 60 days, under the federal Coronavirus Aid, Relief, and Economic Security Act.
That protection covers about 70 percent of loans but it expires on May 18. It also doesn’t apply to other loans. If a person is struggling to pay because of COVID-19, they can request a forbearance for up to 180 days with a chance to extend for an additional 180 days. However, forbearance does not mean forgiveness, and homeowners will have to pay all of those missed mortgage payments at the end.
As of May 3, about 4 million households across the country are in forbearance which translates to about 8 percent. Compared to two months ago, when only one percent of loans were in forbearance, according to the Mortgage Bankers Association.
Also, property owners are allowed to apply for the Paycheck Protection Program to pay for operating costs and staff wages. Many are also eligible for other various small business loans depending on how large their operations are.
Advocates ask the government to help backfill rent
“If we have mass rental assistance that people can access, that’s the way to keep properties afloat,” said Jennie Rodgers, with Enterprise Community Partners.
There are a few proposals floating around to do so, such as the Health and Economic Recovery Omnibus Emergency Solutions Act, also known as the HEROES bill. The Democrat-backed bill passed the House of Representatives Friday; dissenters include Colorado Republican Reps. Scott Tipton and Doug Lamborn. It allows $100 billion from the Department of Housing and Development to be distributed for low-income renters to avoid evictions.
An additional $75 billion will go into the Homeowner Assistance Fund which is supposed to help homeowners pay their mortgage payments and avoid foreclosures.
Debi Stobie, a landlord in Lakewood, has owned a 24-unit apartment building for the past 20 years with her husband. It’s their primary income. She said a little under half of her tenants weren’t able to make rent on time since the start of the pandemic. So far, she said she’s dealing with about a 10 percent reduction in revenue so far.
She’s 62 and sees her properties as a way to retire. But with business on the decline, she’s not sure when that will be possible.
To keep afloat in the meantime, she’s cut costs, like having a landscaper or using contractors for maintenance requests. But she’s nervous all the time.
“You're just not sure,” she said. “The parameters of the economic situation and the virus are not sure. I mean there's a lot of information out there and it seems to change daily. So there's nothing to sort of latch on to say, ‘Oh well it'll be better when this happens or when that happens.’”
CPR reporter Andrew Kenney contributed to this article.
You are one of the CPR readers who wants to know what is really going on these days.
We can help you keep up - The Lookout is a free, daily email newsletter with news and
happenings from all over Colorado. Sign up here and we will see you in the morning!