One of the most visible and devastating impacts of COVID-19, in Oregon, have been the mass layoffs. In Oregon, about 450,000 initial claims for traditional unemployment insurance were received in the first 12 weeks of the pandemic, since the middle of March 2020. This increased the unemployment rate from a low of 3.3% to a high of 14.9%. See chart 1.
The unemployment rate and number of weekly continued claims is a key indicator of landlords’ ability to forecast rent collections each month. The claims filed each week peaked in April and May and began to decline until the week of July 11th when it ticked back up. Most likely this reflects the increase in Covid-19 cases in Oregon and the inability of businesses to successfully reopen.
Chart 2 below reflects the number of continued unemployment claims since the initial stay-at-home order was issued.
Rent collections have ranged from 70-90%, depending on the ability of people to work. One of the factors that has maintained rent collections is the $600/week federal unemployment aid that is set to expire on July 31st. With unemployment still at levels not seen since the Great Depression era, the Treasury has been disbursing the benefits at a record pace of about $100 billion a month since May. The Senate is working on yet another stimulus package in the hopes of reviving the economy. Without extended aid, residential rent collections could very well be adversely impacted. As the Covid pandemic continues, more and more businesses are resetting their operations. This means that they are trying to find other ways to serve their customers and, in many cases, they are cutting staff to stay afloat. Bear in mind that PPP funds were originally designed to last only until the middle of July.
In summary, the number of unemployed individuals is steadily decreasing, and most people are working from home or going back to work in a socially distant work environment. However, we have a long way to go before the unemployment numbers get even close to the pre-pandemic levels. Only time will tell how many renters are able to continue paying rent.