Perspectives on the Region’s Housing Market: A Q&A with Adam Skolnik, Executive Director of the Maryland Multi-Housing Association (MMHA)
WPM sat down recently with Adam Skolnik, Executive Director of the Maryland Multi-Housing Association (MMHA), as he reflected on the state of the regions housing market and the 2020 Legislative Session. We have included portions of that interview below...
WPM: What trends are you seeing in the Greater Baltimore housing market and how has COVID-19 impacted the rental housing industry?
Skolnik: I think the market had been solid prior to COVID-19, both on the transactional side and the operational side. Some soft pockets remained, downtown, where so much new product had come online that a few older communities were having vacancy issues.
While it is too early to ascertain the full extent to which COVID-19 has interrupted the industry, we surveyed our members and found that delinquency rates have increased since March. April’s average delinquency rate was initially 21%, but at the end of the month it was 17.85%. May’s average delinquency rate for survey respondents was 21.9% as of mid-May.
Fortunately, May’s average delinquency was about the same as April’s at time of survey. We also found that by the end of the month, delinquency went down, suggesting people are paying throughout the month. We noticed delinquency is much higher at C class and naturally occurring affordable properties. Things are so fluid right now I am afraid to estimate what the impact in June will be.
WPM: What operational changes do you expect management companies will implement in the aftermath of COVID-19?
Skolnik: Now more than ever, technology is imperative. We expect to see more and more companies adding technology to their operations. Online payment and maintenance portals, virtual tours, and virtual social gatherings for residents are just a few advances our industry has recently adopted, or is pushing to adopt, in the face of COVID-19.
WPM: What do you see as opportunities for the industry?
Skolnik: President Trump, through HUD, is advancing the idea that investors could get a capital gains tax break by investing in impacted low-income opportunity zones, and that could affect much of Baltimore City.
Places like Hagerstown, which are comparatively urban, low income areas, and some parts of the Eastern Shore may show some opportunity, but these may not have the demand or the demographics to support investment.
There’s been talk about supporting affordable housing and increasing the Affordable Housing portfolio, though it hasn’t yielded a lot of legislative actions.
WPM: Are there challenges facing the market other than COVID-19?
Skolnik: Some legislators, at the state level and in some local jurisdictions, seem to think that residents of rental housing need protection from the owners, which could lead them to legislating how we run our business – things like changing escrow laws.
In development, we clearly face a shortage of housing throughout the state and the country (particularly affordable housing). A combination of zoning laws and a lack of available land make it harder to build the housing we need nationwide.
Howard and Anne Arundel counties have implemented environmental regulations that limit a developer’s ability to remove trees. Howard County also has introduced an increased school facility surcharge intended to address overcrowding schools, which places the onus for a solution on developers.
And the book Evicted, which was released several years ago, still has a negative impact on some people’s perception of the industry, because it focused on low-quality, mom-and-pop landlords and their tenants. But most rental housing outside of individual homes in Baltimore City is in larger apartment communities and managed by larger, higher quality providers.
WPM: Which issues from Maryland’s 2020 Legislative Session do you see as having the most impact on the multi-housing industry – at the local level and the state level?
Skolnik: The State had passed House Bill 231, which prohibits residential housing providers from discriminating against a person based on their source of income. In concept, we support the legislature’s intent to deconcentrate poverty and promote fair housing, but HB 231 would require landlords to accept housing choice voucher applicants, and thus require them to enter into a Housing Assistance Payment (HAP) contract with HUD – and some provisions of the HAP contract are particularly onerous, substantially increasing the administrative burden and financial risks for the housing provider.
This is a big issue and it’s been a long-running fight nationwide, for 20 to 30 years.
Under HB 231, landlords would have to wait for local housing authorities to process the lease paperwork, and this could mean holding a unit open an extra six weeks or more, keeping it out of circulation and not generating income. Further, the Public Housing Administration (PHA) may unilaterally alter the contract terms, including pricing. They may even alter or terminate the amount of the housing assistance payments at any time, resulting in termination of the lease and leaving the housing provider no recourse. Rent increases would require prior approval.
Also, if a renting family were to separate, or if they added a child and the PHA determined the unit no longer provided adequate space, the contract would terminate. And if the PHA failed to make its housing assistance payment, the owner would not be allowed to terminate a tenancy. These are just a few of the problems with HB 231. The MMHA published a position paper in February detailing our exceptions with the Bill and suggesting addenda.
We’ve been doing a number of things to prepare for this – not just sharing information, but bringing in local housing authorities after they’ve passed the ordinance and holding sessions with landlords to explain how the process works, who to talk to, etc.
Another item considered in the 2020 session was HB 1628, a sales tax measure that would have hit property management services. Our studies showed that individual rents would need to increase by over $120 per unit, per month, just to cover the new services tax. That Bill would have exacerbated the affordable housing issue, but fortunately it was ultimately defeated.
WPM: What role does MMHA play in Baltimore’s multi-housing industry?
Skolnik: Fundamentally, we do three things – Advocate, Educate, and Communicate. The Advocacy part is obvious. From an education standpoint, we provide internal and external training, like our maintenance training academy, which we provide at no cost to the student. With respect to communication, the Association produces networking events, websites, a blog, and more (mostly for our members), but we absolutely are the voice of industry and public.
WPM: What do you want the general public to know?
Skolnik: The public needs to understand that owners and managers of rental housing are typically really good corporate citizens, and their portrayal in the media and by advocacy communities is simply wrong. The vast majority of owners and managers care about the communities they manage and work in, and they give back every day.
This is an industry that is regulated at every level of government. The issues we deal with are deep and significant – they touch so many areas of life, from helping communities manage during COVID-19 to elevator regulations and towing cars. The fact is that our members are housing hundreds of thousands of residents in good, stable housing. And it’s been that way for a long time.