Key Highlights
- 13% of renters paid part of their April rent bill while 12% of renters made no payment – similar percentage of homeowners delinquent on mortgage payments
- 1 in 9 renters had landlord proactively lower their rent in April
- Among those who missed their full payments altogether, 45% of renters and 44% of homeowners able to agree on reduced or deferred payments
- Younger, poorer and those living in denser, more urban locations had more trouble affording their rent/mortgages
- 27% of renters who paid in full their April rent say they either “not at all” or “not very” confident they could continue rent payments if shelter-in-place lasts through June
- Homeowners +2X more confident than renters they could afford mortgage payments for 6+ months if their incomes lost indefinitely
We’re just beginning to see some stark realities regarding financial impacts of the coronavirus on people’s lives. The number of people unable to afford their respective April housing payments is one clear indication of such quarantine economy realities.
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In a national survey designed by ApartmentList that was just released, we learned that one in four Americans did NOT pay their full housing costs in April. Whether renters or homeowners, 13% of Americans made a partial payment on their rent/mortgage loan and 12% made no payment at all.
Such non-payment discrepancies are far outside the norm. In data from the most recent American Housing Survey collected in 2017, 3.9% of renters failed to pay full rent. In April 2020, 25% of renters failed to make either full or partial payment of their rent due…a delinquency increase of 550%! For homeowners in 2017, the delinquency rate was lower than 3.9% and in April 2020, that delinquency rate on mortgage payments shot up to 23%. Even households earning six-figure incomes, nearly 17%, were unable to afford their April housing bill in 2020.
People living in denser, urban areas were hit harder financially by social distancing and business closures than those living in rural or suburban and therefore had more trouble paying their housing bills in April. And, expectedly, younger and lower income earning households faced more trouble paying their housing bills.
Renting respondents to this ApartmentList survey indicated that only 41% were either extremely or very confident they could keep making rental payments through June if shelter-in-place ordinances continue through June. (Remember that renters are more likely to work in low-wage jobs that are hardest hit by shelter-in-place restrictions.) Home-owning respondents to this survey indicated that 57% were either extremely or very confident they could maintain their mortgage payments if shelter-in-place ordinances continue through June.
Looking forward to some sort of recovery, it’s clear this “quarantine economy” will have lasting effects on the housing market. Some of these effects may be…
- that renters will likely deplete savings they had set aside for down payments on homes
- that Millennials will have a tougher time “catching up” to previous generations in terms of their prospects for homeownership
- that new technologies may enable many more sight-unseen moves
- that this required “work from home” mandate may alter the geography of jobs across the country.
Thanks to ApartmentList’s Igor Popov, Chris Salviati, Rob Warnock.
Also read: Mortgage Relief Coming to Borrowers from Private Lenders, Help Your Clients Become Real Estate Literate with These Financial Terms, Podcast: Time Is Running Out For Gov’t Programs | SBA Programs For Agents
