Twitter Tantrum BY: ND
Recently, I came across video from an amateur economist/lending guru who claimed that there would be a disastrous impact on the workforce and affordable housing sector as a result of the Covid-19 pandemic. His prediction was that high income earning “owned” households would be fine, while lower-end apartment operations would suffer. This was widely covered in the media as well, though it turned out not to be an issue. In part because of stimulus payments and increased unemployment premiums paid to those in need and in part because the whole scenario was blown out of proportion.
Having lived and more importantly invested/owned/operated rental housing through the Great Recession and operated multifamily housing in a number of distressed markets both in California and elsewhere in the Western US, I knew that the high-end rental market would take the hit first. Newer product, mostly luxury and class A product that is occupied by “Lifestyle Renters” always moves the most. Concessions abound, there is a “free rent” and “low/no money down” battle that generally intensifies as units sit vacant, or in this case: people do not pay. It’s the higher end, not the lower end that tends to suffer or feel stresses during times of turbulence.
Nobody, myself included, believes that low-income households aren’t disproportionately burdened by the rising cost of housing in and around the United States. It’s inherent to the descriptor “low income” but the matter at hand was not rent burden, it was performance of the rental market. So while low-income households are impacted by higher housing costs (not related to the pandemic), this has not translated to higher delinquency/non-payment. This was likely helped by stimulus payments and increased unemployment premiums.
And so, when he retweeted the NMHC Stat for the Day, I couldn’t help but point out how at 90.8% collected for May as of May 20th and most data indicating that April 2020 ended up in the 96% to 98% collected range, the multifamily market (including affordable/workforce sectors) had outperformed the media’s expectations and even proved the armchair economist wrong. Simply pointing out that fact in a non-confrontational way prompted a heated exchange, wherein the armchair economist went on to call names, criticize and put words in my mouth. Who calls somebody names on Twitter? That’s what happens when you stick your neck out. You make a projection, it’s off and someone tries to engage in debate or discussion and you resort to name calling and putting words in people’s mouths? That’s called being a punk.
Surprisingly, I’ve been on Twitter for more than 10 years and never had such a heated debate. Here’s the Tweet that started it all:
Logan, that’s why I felt your assessment that workforce/low income housing would be the most affected was off. It’s been the most resilient of the group. Lifestyle renters/renters by choice is most impacted.
— Nicholas Dunlap (@nicholasdunlap) May 22, 2020
OC Real Estate Market Insight 