- Find out how the numbers for renters and mortgage holders unable to pay their rent/mortgages are trending in the US.
- Learn more about the group feeling the biggest hit in this crisis.
- Find out how COVID-19 relief has impacted the numbers.
Obviously, the still-ongoing COVID-19 pandemic has been a major challenge for all of us since March of 2020. In the months since, millions of people have found themselves out of a job. Those still employed suddenly faced working remotely for the foreseeable future.
Even though the vaccine is a light at the end of the tunnel, the impact of the pandemic will be felt for some time.
Case in point: according to one recent study conducted by the Mortgage Brokers Association’s Research Institute for Housing America, about five million Americans were unable to make their rent or mortgage payments in December of 2020. To put this into context, that number translates to more than 5% of all renters and mortgage holders in the country. Fiducial has more information on this potential crisis below.
COVID-19 and a Potential Mortgage Crisis: What You Need to Know
In addition to the significant numbers outlined above, the same study indicated that about 2.3 million additional renters and 1.2 million mortgage holders themselves believed that they were at risk of eviction or foreclosure. Many were worried that they would have to move out of their current homes within the next 30 days. This points toward a heightened anxiety that is adding fuel to an already difficult situation for so many.
But while these numbers may seem shocking, it's important to understand that they do represent an improvement from the spring and especially during the summer months. In September, for example, about six million households missed mortgage or rent payments. This represents about 8.4% of renters and 7% of mortgage holders.
The number of people who feel at risk of being evicted has also gone down, though the level remains high. During August, between 6 and 8% of renters felt at risk of eviction or that they would have to move within 30 days. Fascinatingly, about 5% of renters who didn't actually miss any payments at all also felt that burden.
Landlords taking the biggest hit
However, it's difficult to say that nobody saw this coming. During the initial months of the pandemic when the vast majority of jobs began shutting down, experts predicted catastrophic economic damage. All told, about 9.3 million jobs were lost during the course of 2020. This accompanied the biggest rise in the poverty rate since the 1960s.
Overall, a number of fascinating lessons came from the study. First, the owners of rental property are feeling the biggest effect from people who can't pay rent. It was estimated that they lost a combined $7.2 billion in the fourth quarter of 2020 alone. This was due in large part to missed rent payments.
While this was a decline from the previous quarter, it's still a massive number. It could also paint a harrowing picture of the weeks and months ahead. For the record, losses from rental property grew to a combined $9.1 billion in the third quarter.
Likewise, the COVID-19 stimulus programs instituted last year may be a big part of the reason this problem isn't worse. Experts agree that direct stimulus checks, enhanced unemployment benefits and various rental assistance and mortgage forbearance efforts have allowed people to remain in their homes for as long as possible. Obviously, the federal eviction moratorium helped a great deal, too.
The number of people receiving unemployment insurance benefits has also trended downward very slowly. Among renters receiving UI benefits, the number grew from 3% at the beginning of April to a steady 7% by September’s end. In December, that number dropped to 6%. It has remained at about 3% among mortgage holders since the beginning of April.
All told, there are a number of important takeaways from this report. Most importantly, things are, slowly but surely, declining from their mid-pandemic highs in key areas.
Hopefully, the distribution of multiple vaccines will both slow the COVID-19 pandemic and help ease the economic burden people feel. Additionally, the White House announced on February 15th a program to extend mortgage relief and a moratorium on home foreclosures through June.
For more small business COVID-19 resources, visit Fiducial’s Coronavirus Update Center to find information on SBA loans, tax updates, the Paycheck Protection Program, paid sick and family leave, and more.