Will COVID-19-Induced Rental Nonpayment Drive Large Reductions in Shelter Inflation? Hints from the Great Recession

The dramatic COVID-19-induced rise in unemployment has greatly increased uncertainty about the ability of renters to pay their rent. Ostensibly, a small increase in nonpayment incidence could sharply reduce shelter inflation. Will nonpayment during the current COVID collapse induce such a reduction? We estimate the nature of and change in nonpayment incidence over the Great Recession. Contrary to popular belief, most nonpayment does not translate into a $0 rent. Further, nonpayment incidence is acyclical and uncorrelated with neighborhood income. But some mismeasurement of nonpayment seems likely, threatening CPI accuracy; we offer suggestions to test and address mismeasurement, if present