Millions of homeowners and renters alike are at risk of losing their jobs in the wake of COVID-19, with around 13 million Americans reliant on wages from at-risk jobs, according to the Harvard Joint Center for Housing Studies (JCHS). JCHS notes that many of these households were more likely to be cost-burdened than those relying on income from other industries even before losing work.
The JCHS’s research indicates that renter households are even more likely to be burdened with COVID-19 layoffs, as renter households relying on wages from at-risk jobs had a cost burden rate of 53% while 35% of renter households in other jobs were burdened.
“The loss of service jobs would undoubtedly worsen affordability for households who already must spend an outsized portion of their incomes on rent each month,” Whitney Airgood-Obrycki, Research Associate, JCHS said.
Forty percent of households (5.2 million) whose wages came exclusively from at-risk jobs were cost-burdened as compared to 22% of households (13.1 million) whose income came only from other jobs.
While it is difficult to know what a COVID-19 recession will mean for housing markets, the ongoing affordability crisis will only worsen in coming months. Federal Housing Finance Administration Director Mark Calabria notes that mortgage rates and sales are expected to recover after the crisis, as it is now disrupting both the primary and secondary mortgage markets. Additionally, Calabria stated that the slowdown in economic activity will increase the number of homeowners who struggle to make their mortgage payments.
However, recently, there have been low rates of serious delinquency.
"In the secondary market, Agency MBS liquidity has decreased as investors pull back, especially REITs, money market funds, and some banks," Calabria said. "Also, the Agency debt market has dislocated as a result of economic uncertainty, investor aversion to long-term debt, and a market-wide flight to cash."
The federal government announced a temporary moratorium on public housing evictions and foreclosures of mortgages backed by Fannie Mae, Freddie Mac, and the Federal Housing Administration. State and local governments are similarly implementing eviction protections for renters, though these delay but do not forgive rent payments.
“While these measures are a needed stopgap to help households with reduced incomes now, continued efforts and assistance will be necessary to ensure that those who do lose major sources of income will still be able to afford housing,” added Airgood-Obrycki.