With many workplaces still closed, hundreds of thousands of jobs already lost, and expiration of eviction bans drawing near, tens of millions of people across the country fear being put out of their homes.
Since March, the pandemic has temporarily shut down most business, though some remain partially open, causing unemployment rates to be through the roof, but have stabilized and come back down. This also means that millions of renters have been unable to pay some or even all of their rent since the start of COVID-19 pandemic.
Federal and local moratoriums have protected the renters from eviction during the pandemic. However, these interventions are expiring by early 2021 or maybe sooner. Until now, millions of people are still out of their jobs and even those with jobs may still struggle to afford to pay the many months of missed rents.
Recent study from the Federal Reserve Bank of Philadelphia shows that current outstanding debt would reach $7.2 billion by the end of 2020. Moody’s Analytics estimates that it may even reach up to $70 billion by year end if no additional stimulus is given.
On average, Americans would then owe $5,400 from missed rental payments.
The tens of millions of people whose rental debts are continuously increasing, rate of eviction would far exceed the 3.8 million homeowners who were foreclosed on in 2007- 2010.
Unemployment
Unemployment rate has spared most white-collared professionals, giving them more of an advantage in navigating through this economic downturn. Some suburbs in the Northeast housing market have sprung back to life as buyers seek more space while working online.
However, about a quarter of American renters whose households have children are carrying the burden of debt from not paying rent. A survey from the US Census Bureau shows that people of color (Black and Latino) are disproportionately more financially affected and are more likely to owe rent.
Effect of Rental Market Crisis to Economic Recovery
Rental debt is mounting at a higher rate and this may impede the path to the US’ economic recovery. The government’s moratorium to ban house evictions from March is close to expiring and when this happens, there are about 30-40 million renters who may face eviction.
“These households will have to make some pretty massive financial choices and pull back on other spending to pay their rent, and that’s a hit to the economy
