One-third of households report job or income loss: Redfin
Coronavirus-related hardships cut employment or wages in 32% of households, according to a study by Redfin. Renters bear the brunt of the burden, as 39% were affected compared to 30% of homeowners.
A 53% share of homeowners said they were doing better financially now than in 2016, with 22% saying they're worse off. Comparatively, 44% of renters said they were better off now versus 37% who said things are worse today. Some homeowners have benefitted from equity boosts during the pandemic. Renters cannot leverage any built-up equity during the COVID-induced downturn.
"The pandemic is exacerbating inequality and widening the wealth gap between those who own homes and those who don't," Redfin Chief Economist Daryl Fairweather said in the report. "Renters who have lost jobs or wages are likely dipping into savings for daily living expenses, pushing homeownership further out of reach. More homeowners have been able to keep their jobs, and many who can work remotely are cashing in their home equity to purchase a bigger, better home in a more desirable area."
In addition to shrinking the pool of potential homebuyers, missed rent payments could cause distress for real estate investments and eventually limit home price growth.
"Landlords use rent payments to meet their mortgage obligations, so there could be an increase in mortgage defaults on investment properties," Tendayi Kapfidze, LendingTree's chief economist, said in a statement to NMN. "Landlords with higher levels of leverage would be at higher risk. This could weaken home prices somewhat, but strong demand from the owner-occupied part of the market has thus far kept home prices increasing. So we are not yet at the point where there is concern about the mortgage market."
Thus far, Southern states are furthest behind on rent, according to a LendingTree study. Mississippi had the largest share of renters late on payments at 29%. Louisiana followed at 28.3%, then came Tennessee (24.8%), Georgia (22.9%) and Michigan (22%). Conversely, Montana boasts the lowest share at 4.2%, trailed by 6.8% in Vermont and 8% in Utah.