The recent stimulus will help millions of renters.<
The additional stimulus payments will bring their typical rent burdens from more than 80% of their income to less than half of that percentage, according to a Zillow analysis. But even with this help, millions of people are behind on their rent payments and face an incredible challenge catching up.<
At least three million renters who were employed last March lost their jobs and were still out of work in November, according to Zillow. More than a million of those people are in the accommodation and food services industries, which have been devastated by restrictions aimed at limiting the spread of COVID-19<
For those workers who lost their jobs, federal and state unemployment insurance is now the primary income source. The typical unemployed renter living alone spent 81.2% of that income on rent in November, but that should come down to 43% after they receive the $300 a week from the current stimulus package.<
In early January, the number of renters who could make payments continued to decline. In its recent Rent Payment Tracker, The National Multifamily Housing Council found that 76.6% of apartment households made a full or partial rent payment by January 6. Compared to January 6, 2020, this is a 1.7 percentage point or 192,613 household decline. It compares to 75.4 percent that had paid by December 6, 2020.<
Renters have been able to get by with the help of legislation passed last year, with the additional $600 a week in unemployment insurance payments from the CARES Act bringing down the rent burden to 29.5% for unemployed renters paying the typical rent, according to Zillow.<
But even with eviction moratoriums, Moody’s Analytics estimated that nearly 12 million renters would owe an average of about $6,000 in back rent and utilities by this month. For low-income renters, it won’t be easy to catch up. Low-income renters typically spent 53.1% of their income on rent in 2019. Only 51% of those renters said they could afford an unexpected $1,000 expense.<
“Even though supplemental assistance has resumed, there are financial wounds to heal from the three-month period when some renters were sending more than 80% of their unemployment benefits out the door on the first of the month,” said Chris Glynn, senior economist at Zillow in a statement.<
Problems could again arise after March 14, when the current $300 weekly supplement expires.<
As eviction moratoriums are lifted,
eviction could be a significant issue in Q1 or Q2, according to John Loper, an associate real estate professor at the University of Southern California. However, with about 90% of rents being collected, he says only 10% of rental stock has eviction potential.<
