A new Zillow report found that more than $1.7 billion in rent and mortgage payments are owed each month by U.S. service-sector workers who are currently receiving unemployment benefits due to the COVID-19 pandemic.
These workers include employees in the food, arts, entertainment, recreation and retail industries, according to Zillow. About 70 percent of those payments ($1.2 billion) comes from renters—nearly 3 percent of the total monthly rent paid in the U.S.
But what happens when the COVID financial aid runs out? Zillow says payments could be in jeopardy if workers remain without income for longer than expected, or if local and federal programs end.
“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.”
During the first week of April, 22 percent of renters couldn’t pay their rent due to becoming unemployed, according to Zillow. That figure is up 18 percent YoY, but fell to 20 percent in May—a sign that government aid may be helping to lessen the financial strain.
For more information and to read the entire report, please visit www.zillow.com.