On-time Rent Payments Have Recovered, But Lower-Income Households Still Lag Behind.

Over the past year, the timeliness of rent payments has steadily improved as households recover from pandemic-related financial stress. However, when analyzing payment trends at different rental price points, tenant performance varies.

According to Chandan Economics’ April 2022 Independent Landlord Rental Performance Report, mid-priced rental units have performed the strongest in recent months. For units that are charging $1,500-$1,999 per month—the middle tier in our analysis— on-time rent payments stood at 83.2% through April 15th — the highest level of performance of any grouping in the Chandan Economics-RentRedi data set.

Units with monthly rents below $1,000 maintained the lowest average on-time payment rate as of the April 2022 preliminary estimate, coming in at 77.9%. With limited exceptions, these lowest-price rental units have consistently held lower on-time payment rates than the rest of the independently operated rental housing market. These sub-$1,000 monthly rent units tend to have lower household incomes and lower credit scores in their tenant mix. According to the US Census Bureau’s Household Pulse Survey, there remains significant anxiety for low-income renters in their ability to pay rent.

Lagging performance in the higher-priced segment of the market may come as a surprise but has nonetheless held true. Just 80.4% of units with monthly rents above $2,500 paid their rent on time this month— 226 bps and 289 bps lower than units charging month rents of $2,000-$2,499 and $1,500-$1,999, respectively.

A potential explanation for the underperformance of higher-priced units may be due to the presence of more roommates. The same logic of lower credit quality and household incomes renting at lower rental price points cannot be so easily applied at higher price points with multiple renters in the same unit.

On-time payments across all tracked units, irrespective of price, ticked down slightly in April to 79.4%. This was the first month-over-month decline in the on-time rate since October 2021.

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