Despite New Stimulus, More Than 3 Million Renters Facing COVID-19 Unemployment Bear Extreme Housing Cost Burden

Rhea-AI Summary

A recent Zillow analysis highlights the financial challenges faced by renters due to the COVID-19 pandemic, revealing that many pay over 80% of their unemployment benefits on rent. The new fiscal stimulus package provides an extra $300 weekly, reducing this burden to approximately 43%. However, despite this relief, millions remain behind on rent, accumulating an average debt of $6,000. The analysis also points out that once rent burdens exceed 30%, homelessness rates increase significantly. Housing vulnerability is likely to be a pressing issue for the incoming administration.

Positive

• The $300 weekly stimulus payments significantly reduce rent burdens for unemployed renters, improving their financial situation.
• Zillow's analysis underscores the importance of financial assistance for struggling renters during the pandemic.

Negative

• Many renters remain unable to pay their debts, with an estimated average of $6,000 owed in back rent and utilities.
• The financial relief may be temporary, with potential increases in rent growth affecting future affordability.

SEATTLE, Jan. 12, 2021 /PRNewswire/ -- For millions of renters who remain unemployed during the COVID-19 pandemic, the recently finalized fiscal stimulus package is desperately needed relief. The additional payments will bring their typical rent burdens from more than 80% of their income to less than half, a new Zillow® analysis shows. While the extra assistance helps on a monthly basis, millions behind on their rent still face an incredible challenge in catching up on payments that have piled up before temporary eviction moratoriums expire.

Renters have carried much of the financial burden throughout the COVID-19 pandemic, in large part because of dramatic job losses in high-contact industries that are often staffed by renters. Zillow estimates at least 3 million renters who were employed last March had lost their jobs and were still out of work in November, including more than a million in the accommodation and food services industries that have been devastated by restrictions aimed at limiting the spread of COVID-19ⁱ. 

Federal and state unemployment insurance is now the primary source of income for these renters who have lost their jobs. In November, a typical unemployed renter living alone spent 81.2% of that income on rent. The additional $300 a week from the current stimulus package will bring the typical rent burden down to 43%ⁱⁱ. 

That is a huge improvement, but still well above the 30% threshold at which a household is officially "rent burdened." Previous research from Zillow and collaborators at the University of Pennsylvania and Boston University found that homelessness rates in a community rise sharply once typical rent burdens climb above 30%. The additional $600 a week in unemployment insurance payments from the CARES Act passed in late March brought the rent burden down to 29.5% for unemployed renters paying the typical rent.

"This analysis shows how much even relatively modest amounts of financial assistance can mean to struggling renters," said Chris Glynn, senior economist at Zillow. "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. Temporary eviction moratoriums and unemployment insurance alone may not be enough to keep some renters who have steadily accumulated debts in their homes long term. Housing vulnerability for renters will be a top issue for the incoming administration." 

A federal eviction moratorium remains in place to keep those unable to pay in their homes, though industry estimates show only small drops in the share of renters making payments in full compared to a year earlier. But the rent owed continues to accrue even without the looming threat of an eviction. A study by Moody's Analytics estimated that nearly 12 million renters will owe an average of about $6,000 in back rent and utilities by this month. While unemployed renters remain significantly rent burdened, the additional $300 payments may help reduce the debt they will eventually owe when eviction moratoriums expire. 

Renters who maintained stable employment in 2020, however, saw their rent burdens stabilize during the pandemic due to slowing rent growth for much of the year. In November, the typical U.S. renter who did not receive unemployment benefits paid an estimated 29.6% of their income on rent, a small improvement from 29.8% in Marchⁱⁱⁱ. Rent growth has shown the first signs of a bounceback, potentially reversing the small gains employed renters made in 2021 and making it more difficult for the millions who have fallen behind on payments.

Catching up any debts accrued will likely prove difficult for many who did not have much financial breathing room to begin with. Low-income renters typically spent 53.1% of their income on rent in 2019^iv, and Zillow research from before the pandemic and resulting recession showed that only 51% of renters said they could afford an unexpected $1,000 expense^v. 

Another potential cliff looms on March 14 when the current $300 weekly supplement expires. 

Metropolitan Area*	Typical Rent (November 2020)	Rent Burden - Unemployed Renters w/o $300 Weekly Boost	Rent Burden - Unemployed Renters w/ $300 Weekly Boost	Rent Burden - Unemployed Renters w/ $600 Weekly Boost (April 2020)
United States	$1,734	81.2%	43.3%	29.4%
New York, NY	$2,528	92.9%	53.9%	38.1%
Los Angeles-Long Beach-Anaheim, CA	$2,579	110.5%	62.4%	43.2%
Chicago, IL	$1,661	83.0%	45.0%	30.8%
Dallas-Fort Worth, TX	$1,570	82.2%	45.1%	30.7%
Philadelphia, PA	$1,610	79.5%	43.0%	29.3%
Houston, TX	$1,492	74.1%	41.4%	28.6%
Washington, DC	$2,039	115.7%	64.6%	44.8%
Miami-Fort Lauderdale, FL	$1,935	138.3%	65.5%	42.5%
Atlanta, GA	$1,607	83.5%	45.5%	30.7%
Boston, MA	$2,270	102.4%	58.3%	41.2%
San Francisco, CA	$2,985	125.0%	74.9%	53.6%
Detroit, MI	$1,322	64.3%	34.8%	23.5%
Riverside, CA	$2,206	96.5%	52.8%	35.7%
Phoenix, AZ	$1,558	124.8%	54.7%	34.4%
Seattle, WA	$1,891	97.5%	58.3%	41.2%
Minneapolis-St Paul, MN	$1,546	84.6%	45.4%	30.9%
San Diego, CA	$2,355	129.2%	69.4%	46.9%
St. Louis, MO	$1,154	67.4%	34.0%	22.4%
Tampa, FL	$1,581	108.3%	51.2%	33.0%
Baltimore, MD	$1,663	74.8%	43.8%	30.6%
Denver, CO	$1,743	94.2%	55.0%	38.4%
Pittsburgh, PA	$1,186	47.7%	28.2%	19.9%
Portland, OR	$1,665	80.5%	48.0%	33.4%
Charlotte, NC	$1,533	81.5%	42.8%	28.6%
Sacramento, CA	$1,948	91.4%	52.0%	35.5%
San Antonio, TX	$1,336	77.0%	40.7%	27.3%
Orlando, FL	$1,595	125.0%	59.4%	38.4%
Cincinnati, OH	$1,309	47.6%	28.6%	20.3%
Cleveland, OH	$1,140	59.1%	31.5%	21.2%
Kansas City, MO	$1,205	73.0%	37.5%	24.8%
Las Vegas, NV	$1,483	82.9%	44.6%	30.0%
Columbus, OH	$1,333	77.4%	39.8%	26.4%
Indianapolis, IN	$1,273	69.4%	35.8%	23.7%
San Jose, CA	$2,958	142.9%	85.8%	61.3%
Austin, TX	$1,539	81.8%	47.5%	33.3%
Virginia Beach, VA	$1,397	74.3%	41.1%	28.1%
Nashville, TN	$1,597	105.4%	50.2%	32.6%
Providence, RI	$1,609	71.8%	38.0%	25.7%
Milwaukee, WI	$1,213	64.7%	34.5%	23.4%
Jacksonville, FL	$1,400	101.5%	48.2%	31.0%
Memphis, TN	$1,320	81.7%	38.8%	25.0%
Oklahoma City, OK	$1,103	42.1%	26.3%	18.8%
Louisville-Jefferson County, KY	$995	59.6%	31.2%	20.8%
Hartford, CT	$1,391	67.6%	37.7%	25.9%
Richmond, VA	$1,330	74.2%	40.1%	27.3%
New Orleans, LA	$1,409	98.0%	44.0%	28.2%
Buffalo, NY	$1,123	60.6%	31.8%	21.3%
Raleigh, NC	$1,526	83.4%	44.7%	30.0%
Birmingham, AL	$1,104	71.4%	34.1%	22.0%
Salt Lake City, UT	$1,416	76.7%	43.1%	29.5%

*Table ordered by market size

About Zillow Group
Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate to make it easier to unlock life's next chapter. 

As the most-visited real estate website in the U.S., Zillow® and its affiliates offer customers an on-demand experience for selling, buying, renting or financing with transparency and nearly seamless end-to-end service. Zillow Offers® buys and sells homes directly in dozens of markets across the country, allowing sellers control over their timeline. Zillow Home Loans™, our affiliate lender, provides our customers with an easy option to get pre-approved and secure financing for their next home purchase. Zillow recently launched Zillow Homes, Inc., a licensed brokerage entity, to streamline Zillow Offers transactions.  

Zillow Group's affiliates and subsidiaries include Zillow®, Zillow Offers®, Zillow Premier Agent®, Zillow Home Loans™, Zillow Closing Services™, Zillow Homes, Inc., Trulia®, Out East®, StreetEasy® and HotPads®. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org). 

ⁱ Unemployment estimates are based on an analysis of the Current Employment Statistics data from the U.S. Bureau of Labor Statistics, with estimates constructed from industry-level data and the share of workers in each industry classified as a renter from the American Community Survey.
ⁱⁱ Calculations assume that household income is the maximum possible amount of federal and state unemployment insurance payments for one person, and the household pays the typical rent in a given area.
ⁱⁱⁱ Calculations assume that household income is the median U.S. renter household income, no unemployment insurance payments were received, and the household pays the typical U.S. rent.
^iv U.S. Census Bureau, 2019 American Community Survey: https://www.census.gov/programs-surveys/acs/news/data-releases.html
^v Zillow Research, Sacrifices People Make to Afford the Rent: https://www.zillow.com/research/sacrifices-to-afford-the-rent-25956/

 

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SOURCE Zillow

FAQ

How does the new stimulus package help renters?

The new fiscal stimulus package provides an additional $300 weekly payment, lowering the typical rent burden of unemployed renters from over 80% of their income to about 43%.

What is the average back rent owed by renters in the U.S.?

According to Moody's Analytics, nearly 12 million renters owe an average of about $6,000 in back rent and utilities.

What percentage of income do unemployed renters typically spend on rent?

Unemployed renters typically spend about 81.2% of their income on rent without the additional $300 from the stimulus.

How have rent burdens changed during the pandemic?

While the additional stimulus has provided relief, a typical unemployed renter still faces a rent burden of 43%, above the 30% threshold considered affordable.