America’s Struggling Rental Market Could Bring New Housing Crisis For The Nation

Millions of renters face potential eviction as a housing crisis centered around the growing rental markets in America emerges.

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A large number of renters have been unable to pay some or all of their rent since the Covid-19 pandemic began impacting the US back in March. As the pandemic progressed, many businesses remained closed, or only partially reopened due to safety concerns. This has also pushed renters into unemployment, and for many, a draining of their savings in order to keep themselves afloat. 

Luckily for some, federal and local governments have delayed these payments from being owed from renters and their landlords to give everyone some breathing room in recovering from a pandemic that has now left over 20 million Americans unemployed. However, many city, state, and national eviction bans are set to expire with the New Year, leaving many renters responsible for paying months and months of rent that they may not be able to. 

While it’s difficult to estimate the total amount of money that’s currently owed to government agencies in regards to rental payments, it’s safe to say that the fallout from months of missed rent payments all across the country will greatly impact the economy overall. Mark Zandi, a chief economist at Moody’s Analytics, recently spoke with the press about the unknown and worrisome future that all renters are facing. 

“These households will have to make some pretty massive financial choices and pull back on other spending to pay their rent, that’s a hit to the economy.”

The Federal Reserve Bank of Philadelphia recently performed a study on unemployed workers in America, and found that by the end of 2020 the rent debt for the country would reach $7.2 billion. Moody’s Analytics, on the other hand, estimates that it could reach ten times that, $70 billion, by the end of 2020 if no further stimulus packages are distributed to the people. 

12.8 million Americans will owe an average of $5,400 for missed payments, but remember that number will greatly vary for certain households depending on how much assistance they’ve needed during these uncertain times. This means tens of millions of US citizens will need to scramble to pay their home-rent debt which will likely lead to a massive spike in evictions in the middle of a global health crisis. 

This rising issue is also exposing how lower-income households in America are disproportionately impacted by the pandemic, and yet more times than not receive the same levels of financial and general government support as everyone else. According to data from the US census bureau, households that home people of color are even more disproportionately impacted. 

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“Women and people of color are disproportionately more likely to owe rent, as Black and Latino Californians were twice as likely as their white counterparts to face rent insecurity amid the pandemic.”

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This growing debt isn’t good for anyone, and will likely impede on the US’s economic recovery from the Covid-19 pandemic. Currently, between 30-40 million people in America are facing eviction in the New Year if they are forced to repay every single rent payment they’ve missed within the last nine months. 

In the beginning of the pandemic, many renters either borrowed money from friends or the government, or moved to using credit cards to make their payments, which would make their total amount of debt even greater than initially anticipated. In the spring, credit rental payments to small and medium-size businesses increased by more than 70%. 

Kate Bulger, a financial counselor specializing in housing debt at the Money Management International counseling firm, said the number of tenants she’s now seen using credit cards to make their payments is staggering. “Even if now they are able to make their rent payment, that huge inflation to their credit-card debt has become a new threat to their budget and their ability to cover all their expenses.”

The financial consequences of tens of millions of Americans falling months behind on their rent could impact the economy here for years, as most landlords are unlikely to forgive the debts come 2021. An analysis of rent payments in 11.5 million professionally managed rental apartments in America showed that unpaid rent was 7% higher in those buildings between April and August this year than it was during the same months in 2019. Only time will tell how forgiving the country will be for the multitude of renters facing massive debt payments in 2021.