With Added Unemployment Payments Set to Expire, Housing Insecurity Could Reach Perilous Levels

Rhea-AI Summary

On July 31, over 32 million people will lose the $600 weekly unemployment benefits under the Federal Pandemic Unemployment Compensation (FPUC). A Zillow analysis suggests this will significantly increase rent burdens, especially for Black households. Although the rate of missed rent payments was 12.4% in early July, the expiration of benefits coincides with the end of eviction moratoriums, potentially sparking a housing crisis. Contact-intensive workers, making up 28% of renter households, could face severe cost burdens, with 41% impacted if benefits cease. The current assistance has kept rental payments stable despite record unemployment.

Positive

• The $600 unemployment benefits from FPUC have significantly stabilized renter payments, limiting missed rent to 12.4%.
• Only 3% of renters in high-risk jobs reported severe cost burdens while receiving full benefits.

Negative

• More than 32 million individuals will lose the $600 weekly unemployment benefits, exacerbating housing insecurity.
• 41% of renters in contact-intensive jobs could face severe housing cost burdens if benefits end.
• Eviction moratoriums ending simultaneously may lead to a spike in evictions, raising housing insecurity.

SEATTLE, July 23, 2020 /PRNewswire/ -- More than 32 million peopleⁱ are set to lose the additional $600 per week in unemployment benefits that are part of the Federal Pandemic Unemployment Compensation (FPUC) program. Losing that added compensation on July 31 would send the share of renters facing a severe housing cost burden skyrocketing, a -27585%2F&a=new+Zillow%C2%AE+analysis" rel="nofollow">new Zillow® analysis shows, and Black households would be disproportionately affectedⁱⁱ. 

Expanded unemployment benefits have had an incredible impact on households suffering financially from the coronavirus pandemic. Missed rent payments have grown -- 12.4% of renter households paid no rent during the first two weeks of July, up from 9.9% the previous yearⁱⁱⁱ -- but by much less than might be expected given record levels of unemployment. 

Previous -26929%2F&a=Zillow+research" rel="nofollow">Zillow research has shown renters in the service industry actually saw lower cost burdens when collecting all benefits available to them than they did before the pandemic, illustrating the financial tightrope many households walk. And Zillow estimates that only 3% of renter households in high-risk jobs like healthcare and customer service are severely cost burdened if collecting the full suite of unemployment benefits currently available.  

The additional benefits are set to expire around the same time that many eviction moratoriums will end, potentially causing a more extreme wave of housing insecurity as -27563%2F&a=unemployment+claims+remain+twice+as+high+as+the+worst+week+of+the+Great+Recession" rel="nofollow">unemployment claims remain twice as high as the worst week of the Great Recession. Early signs of this wave have been seen in areas where evictions have resumed -- evictions in Milwaukee in June were 17% higher than average, though some of that could be attributed to a backlog built while they were largely halted in April and May. 

"The boost to unemployment benefits from the federal government has played a crucial role in keeping renters afloat, and has helped insulate the rental market as a whole," said Zillow economist Jeff Tucker. "The rate of missed rental payments hasn't risen nearly as much as expected, and eviction moratoriums are keeping many of those unable to make payments in their homes. But those temporary measures are mostly expiring soon, so without some form of extension to the unemployment benefits boost or eviction moratoriums, we could see a widespread eviction crisis as summer turns to fall."  

Using one segment of the workforce as an example, Zillow's analysis illustrates the potential difficulties renters might face. Contact-intensive workers^iv -- those in jobs that require a high degree of face-to-face and close physical interaction, such as healthcare professionals and front-line service workers -- are present in about 28% of renter households, and have been vulnerable to both job loss and a risk of illness during the pandemic. 

With the assistance currently provided, an estimated 3% of renter households with at least one earner in a contact-intensive occupation and receiving all available benefits would spend more than half of their income on rent. If benefits from the FPUC program were to cease altogether, 41% would face this severe housing cost burden. Even if FPUC benefits were extended at half their current scale -- $300 per week -- just 14% would. 

This analysis assumes renters are not able to pull from savings put away for a rainy day, which is often the case. About half of renters said before the pandemic that they 241%2C000+expense" rel="nofollow">could not afford an unexpected $1,000 expense. 

This is an especially difficult problem for renters because those with contact-intensive jobs who rent their home typically have lower incomes than their homeowner counterparts -- $32,000 is the median income for renters in these jobs, compared to $49,800 for homeowners. These renters are also more likely to be the primary earner than homeowners, so income shocks usually have a greater effect on overall household income. 

In addition to differences among renters and homeowners who hold these types of jobs, disparities are evident among racial groups. Contact-intensive workers contribute 72% of household income in Black households, compared to 53% in white households, even though the median household income of Black households with a contact-intensive worker is 15% lower than that of similar white households. This means Black renters are more vulnerable to the widespread income loss prevalent in these industries. 

About Zillow
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In addition to for-sale and rental listings, 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.

Millions of people visit Zillow Group sites every month to start their home search, and now they can rely on Zillow to help them finish it — with the same confidence, ease and empowerment they've come to expect from real estate's most trusted brand.

Launched in 2006, Zillow is owned and operated by Zillow Group, Inc. (NASDAQ:Z and ZG) and headquartered in Seattle.

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ⁱ U.S. Department of Labor, Unemployment Insurance Weekly Claims: 16%2C+2020" rel="nofollow">UNEMPLOYMENT INSURANCE WEEKLY CLAIMS, JULY 16, 2020
ⁱⁱ All household income and housing burden data provided from a review of the U.S. Census Bureau's 2018 1-Year American Community Survey.
ⁱⁱⁱ National Multifamily Housing Council, Rent Payment Tracker: NMHC Rent Payment Tracker
^iv Definitions from the Federal Reserve Bank of St. Louis: Social Distancing and Contact-Intensive Occupations | St. Louis Fed

 

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SOURCE Zillow

FAQ

What will happen when unemployment benefits expire on July 31, 2020?

Over 32 million individuals will stop receiving the $600 weekly benefits, increasing housing insecurity.

How many renters are at risk of eviction due to the unemployment benefits ending?

41% of renters in contact-intensive jobs could face severe cost burdens if benefits from the FPUC program cease.

What was the rent payment status in early July 2020?

12.4% of renter households did not pay rent during the first two weeks of July, up from 9.9% the previous year.

How do Black households compare in terms of housing insecurity related to unemployment benefits?

Black households are disproportionately affected, with contact-intensive workers contributing 72% of household income.

What percentage of renters will be severely burdened if unemployment benefits are reduced to $300 weekly?

If benefits are extended at $300 per week, only 14% of renters would face severe cost burdens.