RealtyTrac: There’s a Greater Chance Landlords Will Default | Paper Source Online

Originally published by Florida Realtors | February 17, 2021

4 Florida counties made the top 25 for increased risk of landlord default, mostly due to an eviction ban that made it harder for some owners to pay the property’s mortgage.

A RealtyTrac analysis finds that single-family rental property owners face an above-average risk of default in 48% of all U.S. counties, and four Florida counties – Collier, Lee, Polk and Marion – made RealtyTrac’s top 10 list for risk of landlord default.

The RealtyTrac Rental Property Risk Report gauges the relative default risk of single-family rental homes, almost 90% of which are owned by mom-and-pop investors who own fewer than 10 properties.

The higher default risk is tied to the COVID-19 pandemic – the resulting job losses and government-imposed eviction ban that reduced on-time rental payments. For property owners paying a mortgage, the loss of all or part of their monthly rental income increased the risk of default.

In RealtyTrac’s index, the average risk score among the country’s 3,143 counties is 50.2, with 1,514 (48%) at above-average risk. In the 100 largest U.S. counties (based on the total number of properties), the average risk score is 43.6, with 53% at above-average risk.

Counties in Florida, New York and California counties accounted for 44% of the 25 most at-risk counties. Florida (Collier, Lee, Polk, and Marion) and New York (Erie, Kings, Monroe, and New York Counties) each had four counties in the top 25 ranking, and California (Kern, Riverside, and San Bernardino) had three.

“The job losses in a handful of severely impacted industries due to the COVID-19 recession have disproportionately affected renters,” says Rick Sharga, RealtyTrac executive vice president. “Federal, state, and local governments have responded by enacting eviction bans to protect tenants, but in doing so have inadvertently put many landlords at risk – and the longer the eviction bans are in place, the higher the likelihood that these landlords are going to default on their mortgages, declare bankruptcy, or be forced to sell off properties at distressed pricing, which could have a negative impact on local housing markets.”

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