Hawaii Rental Tenants Are Struggling as Vacancies Rises
In an August survey, the Economic Research Organization at the University of Hawaii (UHERO) found that over 9,000 households are behind on rent while vacant rental units increased to 9% from 3.89% during pre-COVID.
The survey data is based on 6,719 rental units and a total of 271 landlords and property managers across the State of Hawaii. UHERO partnered with several organizations including the Honolulu Board of Realtors and the Kauai Board of Realtors to more landlords and property managers to complete the survey.
Before the pandemic, nearly 95% of tenants are paying their rent on time. In August, it’s down to 85.80 percent.
Even though that 85% of tenants are paying, according to UHERO, “the job figures suggest that a substantial portion of those households have experienced at least one job loss, forcing them to sacrifice well-being to pay their rent.”
Six percent of tenants paid their rent late while 3.21% has 30-day delinquency and 4.97% has a 60-day delinquency.
Although the 4.97% 60-day delinquency seems small, this percentage represents over 9,000 households according to the survey.
“The “invisible” struggle is echoed by our respondents. Landlords and property managers can’t know everything about what their tenants are going through, but their assessment of their tenant’s financial situation is sobering,” according to Philip Garboden of UHERO.
“Our respondents estimate that 60% of their tenants have suffered a financial hardship, although two thirds of those tenants are still current on their rent.”
Garboden also explained that landlords and property managers are “willing to work with their tenants during the crisis.”
As per the increase of vacant rental units to 9%, UHERO noted the reason for the increase is “certainly multifaceted.” Reasons include financial strains pushing families to live in a multi-generational household, out-migration and epidemiological motives.
With the increase in vacant units, 50% of landlords and property managers are still maintaining profitability, 40% are struggling and 10% are considering selling their properties.
The UHERO August survey on rental properties was conducted to collect data before the launch of Hawaii’s rental relief fund, a program that provides assistance to renters and homeowners who was greatly affected by the economic challenges due to COVID-19.
“For struggling tenants and their landlords, this program has the potential to provide an essential lifeline,” wrote Garboden.
If the patterns in the survey continues, “the preservation of rental housing may become an increasingly pressing issue,” according to Garboden.
“This is particularly salient given that relief funds are scheduled to end on January 1st, long before UHERO forecasts any meaningful economic recovery,” he added.
“But even in a best case scenario, with additional federal assistance allowing for robust UI and rent support through 2021, an increase in vacancy rate alone presents a threat to our rental housing stock, as more landlords may elect to sell their properties during what promises to be a long road to recovery.”
To learn more, visit uhero.hawaii.edu.