Zillow: Newly Unemployed Service Workers Owe $1.7 Billion/Month in Housing Payments
Zillow, Seattle, said its analysis found more than $1.7 billion in rent and mortgage payments is owed each month by U.S. service-sector workers currently receiving unemployment benefits as a result of the coronavirus pandemic — payments that could be in jeopardy if expanded local and federal unemployment assistance fades or workers remain without incomes longer than expected.
The analysis said service-sector workers—including the food, arts, entertainment, recreation and retail industrie—”are perhaps feeling the greatest financial impact from COVID-19 as many shops and restaurants reduced operations or shut their doors completely.” Zillow estimated $1.7 billion in rent and mortgage payments is owed each month by service-sector workers who received unemployment benefits in April as a result of COVID-19.
Nearly 70% of that total ($1.2 billion) is from renters, representing 3% of the total monthly rent paid in the U.S., even before accounting for newly unemployed renters in all other industries — Zillow estimates service-sector workers comprise a little more than a third of those who have lost their jobs as a result of the coronavirus pandemic. Previous Zillow research has shown renters in the food and retail industries already struggled with cost burdens before the pandemic, making it difficult for those who fall behind to catch back up.
“As we’re watching resilient buyers return to the for-sale market and more renters able to pay on time in May than in April, it’s important to remember that much of the confidence that led to that improvement rests on massive government aid,” said Zillow Senior Principal Economist Skylar Olsen. “By supporting the more than 40 million Americans who have filed for unemployment benefits, that package is not only easing financial hardships but also safeguarding the housing market from widespread evictions and foreclosures that could have devastating effects. That safety net has an end date, so if employment does not bounce back as hoped this summer the housing recovery could be impeded, especially for renters who aren’t insulated by the equity owners hold in their homes.”
Zillow said safety nets, including unemployment benefits, CARES Act stimulus checks and temporary renter protections have eased tensions for many households for the short-term, at least. “But with state reserves stretched, stimulus checks covering only a portion of the typical monthly rent or mortgage payment in many states, and many workers who don’t qualify for benefits, a large share of housing payments could be missed eventually if government assistance expires or jobs don’t return to pre-pandemic levels — likely pushing some into housing insecurity,” the report said.
Skyrocketing unemployment caused nearly 22% of renters to not pay any of their rent during the first week of April, up from about 18% a year ago; that fell to 20% in May, which Zillow said was a possible signal that government aid and the reopening of some businesses is helping to lessen financial stress.
“It’s not only service-sector workers that are experiencing mass unemployment during the coronavirus pandemic,” Zillow said. “Some states with economies reliant on manufacturing are also feeling the impact of heavy unemployment. In Ohio, where manufacturing makes up the largest share of the state’s GDP, 53% of housing payments owed by manufacturing workers are from those whose jobs have been affected by COVID-19. In Michigan, that share is 27%.”