It is no secret that renters are typically lower-income earners when compared to homeowners and are disproportionately affected by market fluctuations and outliers such as COVID-19. But now that most federal- and state-level protections have expired, it has been found that renters were three times more likely than homeowners to miss payments this fall.
According to new research by the Mortgage Bankers Association’s [1] (MBA) Research Institute for American Housing [2] (RIAH), the share of renters whom either missed, delayed, or partially paid their rent rose to 9.6% in September and rose again to 10.9% in October from a rate of 8.6% seen in July.
In comparison, only 3.2% of homeowners missed, delayed, or partially paid their mortgage in September, a number which rose to 3.8% in October from a rate of 3.8 in July.
"The economy and labor market continued to improve during the fall months, but the sunset of government support programs, inflationary pressures, and rising COVID-19 cases were all likely factors in the upticks in missed housing payments in September and October," said Gary V. Engelhardt [3], Professor of Economics in the Maxwell School of Citizenship and Public Affairs at Syracuse University. "Renters were three times as likely to miss a housing payment compared to homeowners and appeared to be vulnerable to the expiration of expanded pandemic unemployment benefits. The share of renters who received unemployment fell from 6% over the summer to below 1% in October."
The MBA estimates that since the beginning of the pandemic through October, missed rental payments total $52.5 billion while missed mortgage payments total $83.9 billion.
"RIHA's research throughout the pandemic has provided a comprehensive picture for industry stakeholders and policymakers on households' ability to make their housing statements," said Edward Seiler [4], Executive Director, Research Institute for Housing America, and MBA's Associate Vice President, Housing Economics. "The overall economic outlook looks brighter but still greatly depends on the course of the virus. Continued job growth and wage gains—especially if they can offset inflation—are key to helping those households that are still facing hardships."
Other high-level findings in the report including:
- 17.2% of renters who missed their June payment also missed their September payment.
- Among those who missed their September rental payment, 48% had someone in their household in the labor force.
- The percent of renter households receiving permission from their landlords to delay or reduce payment has trended down from almost 20% at the start of the pandemic to approximately 10% in September 2021. There was an uptick in October to over 11%.
- The share of renters who received unemployment insurance benefits dropped sharply to 1% in September and October from over 6% in second-quarter 2021.
- The share of homeowners who missed their mortgage payments stood at 3.2% in September and 3.8% in October. This compared to 3.8% in July 2021 and 7.8% in July 2020. This is also lower than the corresponding months in 2020 (7% for September and 5.7% for October).
- 54.2% of mortgagors who missed their June 2021 payment also missed their September payment.
- Among those who missed their September mortgage payment, 58% had someone in the labor force.
- The percent of mortgagors who received permission from their lenders to delay or reduce payments has trended down from 25% in May 2020 to approximately 12% in September and October 2021.
- The percent of mortgagors who received unemployment insurance benefits continued to trend down to just over 1% in October 2021.
Data for the report comes from the Understanding America Study by the University of Cincinnati, which is an internet-based survey reaching over 8,000 households. The study has been tailored to study the impact of the pandemic as time goes on.