TransUnion conducted a study to keep a pulse on the financial health and stability of the renter population and the ripple effect on property owners and operators. We offer a couple of takeaways.
Every now and then, it is helpful to focus on the larger picture.
It should go without saying that these have been difficult times for everyone, and that the pandemic does not discriminate against property owners and renters. Our hard-won experience has shown that property owners and their agents have worked with tenants so that both landlords and tenants come out ahead on the other side of COVID.
Real estate numbers have remained relatively strong, and this may be counterintuitive during a public health crisis. The reality is, everyone is tightening their belts. There has been a surge in single-family home sales, according to one economist known for being good at predicting bad news, because aspiring homeowners have piled up a lot of money for a down payment.
This pool of money represents “involuntary savings” that has accumulated during a period when money can’t be spent. Can’t buy a 49ers ticket, can’t go on a cruise, can’t get a massage, or can’t even go out to eat.
Another stabilizing force has been savvy real estate investors taking advantage of declining home prices.
Thrifty renters are spending wisely, too, according to TransUnion’s analysis
Many experts predicted that consumers would turn to debt to meet expenses like rent, but according to the credit reporting agency, they were wrong. Consumers have shown an increased awareness of credit, the study makes clear, noting that renters are religiously checking their credit during the pandemic, with 57% of those surveyed in the study stating that they check their credit once per month.
The opening of new trade lines has actually decreased, and this has led to a corresponding rise in credit scores across the board.
Importance of credit is a positive sign for property owners owed rent debt
Under the COVID-19 Tenant Relief Act of 2020, there will be a mountain of rent debt accrued during the pandemic that can be recovered in civil courts, but our strong preference, of course, is that the rent be paid and that property owners avoid litigation. We are encouraged that conscientious renters have indicated they want to preserve their credit and avoid a judgment on their record. In a recent webinar, we delve deeper into the subject of recouping rent debt.
The TransUnion study offers a bit of advice to property managers, noting that as credit scores in general rise, it may be worthwhile to revisit their credit screening criteria to ensure they account for this change in credit behavior.