In addition to all of this, Denver has one of the strongest rental markets in the country. People have been relocating here in troves well before the COVID-19 pandemic and that has only increased since the shutdown.
DENVER (PRWEB) January 27, 2021
Challenges Denver Property Owners are Facing
Given the unpredictable market fluctuations and rampant tenant financial instability, there are several challenges that landlords are currently facing throughout the Denver area due to COVID-19:
Certain areas are seeing extended amounts of vacancy, which is leading to high levels of saturation in those markets. Vacancy is a costly expense to any property manager, so getting properties leased quickly is key. We counteract saturation by being flexible with monthly rental rates which may lower returns for owners.
Landlords are seeing a higher level of lease break situations and abandonment of properties due to people not being able to afford their current housing. Owners have fewer options for payment plans and forgiveness so unexpected vacancy can present even more issues.
Non-payment, of course. Landlords have little to no recourse right now to remove tenants from their properties who aren’t paying.
Challenges Tenants are Facing
Tenants are facing several challenges as well, but they are significantly different from that of their landlords. Additionally, during this time, tenants have more legal protection. Some tenant-specific challenges include the following:
Non-Payment is the obvious one. Unemployment doesn’t even come close to covering the average cost of rent, let alone food, utilities, and other financial obligations a tenant has. By now, savings have been drained and credit cards are getting maxed out.
The market for rentals is becoming increasingly more competitive. Although some markets are experiencing saturation, the demand for affordable housing is only increasing. Just because the market is saturated does not mean it’s affordable.
Bills aren’t going away. Although payment plans are in place and short-term forgiveness on late payments is a thing, the bills are still stacking up. Assistance programs are over-saturated and running low on funds and the demand is not going anywhere, especially as businesses who can’t keep up are laying people off.
Denver Property Laws
The original CARES Act (Coronavirus Aid, Relief, and Economic Security Act), a $2.2 trillion economic stimulus bill passed by the 116th U.S. Congress on March 27, 2020, had protections and forgiveness for property owners with federally backed mortgages. Since that has expired, those protections no longer apply to property owners. Property owners of rentals typically receive financing from private institutions, which was not a protected class within the CARES Act, leaving it up to the banking institutions to allow forgiveness or not.
Job Loss & Evictions
Since the CARES Act expiration, there have been multiple orders instituted by Governor Polis extending policy from the original CARES Act, and of course, the most recent CDC order putting a temporary halt on all evictions through December 31, 2020. As of right now, the presiding order is from the CDC along with the orders from Gov. Polis. A memo distributed on September 1, 2020, included a draft order published by the CDC entitled, “Temporary Halt in Residential Evictions To Prevent the Further Spread of COVID-19,” which as stated, halts residential evictions for rent non-payment from September 4, 2020 to December 31, 2020.
As of October 15th, Executive Order D 2020 223 placed a halt on any landlord charging penalties to a tenant for untimely payment. In addition, landlords cannot file for any form of eviction unless there is evidence of a substantial violation, as in the individual is harming or damaging the property or another person. What this means for landlords is that they are left with no tools or resources to enforce lease agreements. In the long run, this is only going to increase the backlog of evictions when these orders are lifted, causing more harm than good in the long run.
Additionally, there is a declaration form that tenants must sign and return to the landlord certifying that they have made all reasonable efforts to make partial payments, they have suffered a financial loss from the pandemic, they received a stimulus payment earlier this year, and they will be homeless if evicted and would have an increased risk of contracting coronavirus if homeless, in order to avoid being evicted. If you have received a judgment from the courts and a tenant provides you a signed declaration, the entire process is put on hold until these orders are lifted. If you have NOT received a judgment from the courts and you have received a signed declaration from the tenant (depending on the municipality), the judge may likely dismiss the entire case. This means that the tenant can live in the property while not making any kind of payments until these orders are lifted and the landlord must then start the entire process from scratch.
Landlord Non-Payment Losses
Unfortunately, there is nowhere for a landlord to claim any kind of loss for non-payment. We are seeing quite a few property owners refinancing their properties with interest rates being as low as they are to reduce their monthly payments, if at all possible. That is really the only option owners have right now.
Denver Rental Market Predictions
Given the current conditions, we have a few predictions about trends in the Denver rental market due to the impact of COVID-19. To start, low income and affordable housing are going to become more important than ever. Lower income families are already struggling to provide for their families in everyday life without COVID-19. Statistically, they are more likely to have less money in savings and their resources are likely already thin which inherently will lead to a longer recovery time for this demographic. We will see the side effects of COVID-19 in lower income communities for longer than the rest of the housing markets.
However, the most interesting part is there are still industries that are surviving, and possibly thriving, through this pandemic, there is still a heavy demand for luxury housing as well. As of right now, people are moving further out of densely populated areas to more suburban areas or areas that you get more bang for your buck and more space to move around. People live in the city for convenience and amenities. If people don’t have to leave home to go to work and they can’t take advantage of the surrounding areas, why would they pay the premiums to live there? They are buying/renting up the higher end properties outside of the city.
In addition to all of this, Denver has one of the strongest rental markets in the country. People have been relocating here in troves well before the COVID-19 pandemic and that has only increased since the shutdown. A lot of industries and professions are completely restructuring the way they do business, allowing people to have more freedom and the ability to relocate and work remotely. We have definitely seen a major increase in people relocating from out of state-I don’t think that will slow down for quite some time.
Waiting Game for Property Managers
Right now, a lot of the complicated nuances of managing property amidst a global pandemic is a waiting game. If our owners have experienced a loss, we have been able to get a tenant out and release the property. We haven’t experienced a large volume of owners who have people not paying and staying in the house. As the holidays approach, we would guess that we will see a spike in this-especially if things shut down again. A lot of these laws/executive orders are changing quite literally on a daily basis, so statistics aren’t as consistent as we like to see.
Walters & Company Property Management
COVID-19 has surely rattled the rental market alongside countless other industries, but Walters & Company has found strategic and mindful ways to adapt and continue to serve their customers with the same sincerity, diligence, and trustworthiness. Since we started in 2013, we’ve grown substantially through referrals and reputation, but we’ve never lost sight of the family-owned foundations we started from. We hire people who care a lot and who do what they say. We will answer the phone when you call. And if you have a maintenance concern, we’re on it. Learn more about our property management services.