Research conducted by Harvard University’s Joint Center for Housing Studies (JCHS) found renters tapped a variety of financial resources, according to a new study published as part of the “Housing Crisis Research Collaborative.”
Renters who lost employment began using credit cards, savings, and borrowing from family and friends to meet financial obligations.
The JCHS found in “Making the Rent: Household Spending Strategies During the COVID-19 Pandemic,” with data from the U.S. Census Bureau from August 2020 to March 2021, nearly 17% of renters were behind on their rent and 52% had lost employment income since the onset of COVID-19.
Households that lost employment incomes were less likely to use regular income sources compared to before the pandemic to meet spending needs (44%). Just 76% of households who did not lose their jobs relied on varying methods to meet financial obligations.
“Our findings indicate that the financial impacts of the pandemic are likely deeper than the estimates of rent arrears alone might suggest,” the JCHS stated in its study.
Additionally, renters who lost income and also fell behind on rent were more likely to borrow from family and friends. Fifty-two percent of those who lost employment resorted to borrowing from family and friends, compared to roughly 25% for those who did not lose employment.
Households that made less than $25,000 were less likely to use regular income sources, such as credit cards or savings, to meet their savings because they lacked access to these resources.
Unfortunately for renters, recent data from Realtor.com found December rents increased for the sixth-consecutive month. These increases were led by metropolitan areas, such as Miami, where rents increased by 49.8%.
The national median rental price in December 2021 reached $1,781 per month, which equates to an annual rent increase of 10.1% compared to the 1.9% growth seen in 2020. The rental price of an average studio apartment now sits at $1,462 (up 18.6% year-over-year), a one-bedroom unit goes for $1,651 (up 19.3%), while a two-bedroom unit stands at $2,003 (up 19.1%). The median rent for all unit types is now up to $1,781 in December, the sixth consecutive month of double-digit gains.
Data from ATTOM revealed that home ownership is less expensive than renting in many areas of the county. ATTOM’s Rental Affordability Report for 2021, showed that owning a median-priced home is more affordable than the average rent on a three-bedroom property. Some 58% of the 1,154 U.S. counties analyzed for the report reveal that major home ownership expenses consume a smaller portion of average local wages than renting.
As a whole, though, home ownership remained more affordable even though median home prices increased more than average rents and more than averages wages in 88% of the U.S. counties analyzed. Renting was more affordable for the average wage earner than buying a home in 21 of the nation's 25 most populated counties.