November Rental Market: Troubling Signs Remain As State Prepares for an Uncertain 2021


By Philip ME Garboden

This month, UHERO completed its second quarterly survey of rental property owners and managers (the first from August 2020 can be found here). Our primary goal is to understand how the rental market is fairing during the extended COVID-19 crisis. Are tenants increasingly struggling to make rent? Are rental property owners seeing increased vacancy rates? What is the health of the rental market overall?

Our findings suggest that not much has changed over the last six months. Rental property owners continue to see elevated rates of rent arrearage and vacancy, although they are more optimistic about the future. While the lack of further decline is certainly a positive signal, it is important to recognize that our data were collected after the State’s Rent Relief program had ramped up to complement other county-level efforts.

We are looking to maximize participation each quarter. If you own or manage rental property in Hawaii, please provide your contact information to us for the next survey wave.

Responses were solicited by a number of partner organizations including core partners at the Honolulu Board of Realtors and the Kauai Board of Realtors. In total, 181 landlords and property managers completed the survey providing us with data on 6,167 rental units in the state. All responses are benchmarked at the 15th of November.

Table 1 shows how our survey respondents compare to the rental market as a whole. Importantly, our respondents represented the lower portion of the rental market in Hawaii, with the majority owning or managing properties below the median. Weights were created to rebalance the sample, but results were appreciably the same (meaning that the higher cost units in our data were reported to be performing similarly to the lower cost ones). To avoid complexity, we present the unweighted statistics, but it is important to note this unbalance when interpreting our results.

Characteristics of Survey Respondents Compared to Census Data, November
Survey DataCensus Data
 numper numper
Total Units6,167NA 185,331 
Units by County     
Honolulu4,90179.47% 134,92272.80%
Kauai5899.55% 7,4694.03%
Maui4377.09% 21,45511.58%
Hawaii County2403.89% 21,48511.59%
Units by Building Type     
Single Family2,62042.48% 101,98455.03%
Multi Family3,54757.52% 83,34744.97%
Units by Median Rent     
Below Median4,36473.49% 92,66650.00%
Above Median1,57426.51% 92,66650.00%
Units by Subsidy Type     
No Subsidy3,35373.87%   
Voucher3447.58% 10,5065.67%

Aside from these observable differences, the landlords and property managers who completed our survey may differ from those that did not in unobservable ways. It is likely that individuals with more intense opinions about an issues would be more likely to take the time to provide data. Thus, we strongly encourage caution when interpreting any particular statistic. Not only do surveys of this kind have large margins of error, but certain segments of the population may not be adequately represented.

Renters Continue to Struggle to Pay Rent

As before, the number of renters behind on their rent remained substantially higher than pre-COVID baseline conditions. In a normal month, most landlords expect about 5% of their tenants to be late on rent, and about 2% falling at least a month behind. In November, 17% of tenants were late and, most troublingly, 7.5% were over a month late on rent. This figures are despite the active participation of nearly 40% of our landlords in the various rent relief programs (which they reported assisting 6.5% of their tenants).

Rent Delinquencies on 15th of Month, November
Total Units 
Units Paid, Pre COVID96.12%
Units Late, Pre COVID2.48%
Units >30 Days, Pre COVID0.55%
Units >60 Days, Pre COVID0.55%
Units Paid, November 202083.33%
Units Late, November 20208.29%
Units >30 Days, November 20202.98%
Units >60 Days, November  20204.46%

These numbers are nearly identical to data from the Census Pulse Data, which reports 19% of all renter households in Hawaii behind on rent.

Landlords and property managers reported high levels of willingness to help address this situation. Two thirds said they were at least willing to work out a payment plan, while a quarter said they could realistically waive some portion of the back rent or lower the rent going forward. About a fifth stated they were unwilling to compromise.

Willingness to Negotiate, November
Total Respondents 
Willing to defer rent or give payment plan67.40%
Willing to lower rent30.39%
Willing to waive or discount rent23.76%
None of above18.78%
Note: Check all that apply.

As before, property owners and managers reported very low levels of tenants taking advantage of the moratorium, identifying fewer than 2% of tenants who had not suffered an economic hardship yet were delinquent in rent. Of the 55% of tenants who landlords reported had suffered a hardship, the majority were nonetheless current on their rent or less than one month late.

Tenant Condition, November
Total Units 
Have suffered an economic hardship but paid rent on time.33.21%
Have suffered an economic hardship and paid rent late.13.72%
Have suffered an economic hardship and are currently delinquent on rent.8.51%
Have not suffered an economic hardship but are currently delinquent on rent.1.70%
None of the above42.86%

Inconclusive Rental Vacancy Numbers

The vacancy numbers reported on the survey are somewhat puzzling and more data is needed before a strong conclusion can be made. On the one hand, landlords and managers reported lower vacancy rates than for our August Survey (5.6% compared to 9.2%), but the pre-COVID numbers are different as well (2.9% compared 3.9%). So in both cases the vacancy rate was reported to be substantially higher than pre-COVID, but differences in the sample resulted in different baseline figures.

Vacancy and Turnover, November
Total Units 
Vacant Units, Pre-COVID2.87%
Vacant Units, August 20205.61%
August Turnover3.55%
August Turnover, Planned2.03%
August Turnover, Unexpected1.52%
August Turnover, To Hawaii1.69%
August Turnover, Elsewhere1.31%
August Turnover, Don’t Know0.55%

Thus we can only conclude that for both surveys, vacancy rates are higher now than before COVID, but the degree to which this has changed since August is difficult to estimate.

Participation and Awareness of Rent Assistance Programs High

While better data on the reach of the State and County Rent Assistance Programs certainly exists, our survey suggests than nearly 40% of landlords and property managers are participating in at least one of the programs (with differences relative to the size of each program). While the overall numbers of renter households touched by the program remains modest (6.4%) that figure represents over 10,000 households in the state. Without the program, the delinquency figures would almost certainly be substantially higher.

Percent of Respondents With At Least One Tenant Participating
State Program Combined36.46%
Aloha United Way26.52%
Catholic Charities27.62%
Kahiau (Council for Native Hawaiian Advancement)4.42%
Hawaiian Community Assets3.31%
Household Hardship Relief Fund (Honolulu)9.39%
At Least One Program39.78%
Percent of Units Receiving Support6.40%

Landlords Are Somewhat More Optimistic

While a third of all respondents reported that they were struggling to keep their portfolios profitable, this is actually a slight decrease from back in August. A similar trend can be seen in anticipated rent changes, with nearly a fifth now saying that rents in their niche will likely start trending up.

Expectations, November
Total Responses 
Anticipate rent… 
Staying roughly the same52.49%
Trending down25.97%
Trending up19.34%
No Response / Don’t Know2.21%
Are you… 
Struggling to stay profitable32.60%
Trying to sell some properties8.29%
Maintaining Profitability55.80%
No Response / Don’t Know3.31%

Policy Considerations

An optimistic reading of these findings is that the rental situation has not appreciably worsened since August despite an extremely modest economic recovery and the expiration of augmented unemployment. And yet the relatively static situation must be viewed in light of an enormous investment in rental assistance at both the State and County levels. This does not mean that these programs were ineffective. Indeed, they have combined to distribute perhaps the most rent support per capita of any state in the nation. Yet despite these efforts, the overwhelming need has put as many new renters at risk as these programs have managed to stabilize.

At the moment, our best estimate is that 20% of the renter households are late on rent, which translates to roughly 30,000 households. As previous data collections have shown, the majority of those households will find a way to pay by the end of the month, but some will not. Indeed, roughly a third of those households are more than a month behind. That’s over 10,000 households that have accumulated at least a month worth of rental debt and thousands of landlords who have not received payment. Left unchecked, this will necessarily result in bad outcomes for tenants, additional strains on our already overwhelmed housing systems, and a decline in our state’s rental stock as landlords sell their properties into what remains a hot homeownership market.

As described in detail in a previous post, this problem is not going away. Despite recent positive vaccine news, the most recent UHERO forecast harbingers a slow economic recovery. Given the recent Federal allocation of $200 million toward rent relief in Hawaii, we have the opportunity to resolve a significant portion of the challenges for both landlords and tenants. There are significant details to work out, but an effectively targeted program that builds off the lessons learned can not come soon enough.

We are looking to maximize participation each quarter. If you own or manage a rental property in Hawaii, please provide your contact information to us for the next survey wave.

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