The Mortgage Bankers Association's (MBA) Research Institute for Housing America (RIHA) found that slightly under five million households did not make their rent or mortgage payments in March 2021, an improvement from data recorded in December 2020, and the lowest number since the onset of the COVID-19 pandemic
“Housing-Related Financial Distress During the Pandemic,” RIHA's study co-authored by Gary V. Engelhardt, Professor of Economics in the Maxwell School of Citizenship and Public Affairs at Syracuse University, and Michael D. Eriksen, Associate Professor of Real Estate at the University of Cincinnati, found that 7.7% of renters (2.56 million households) missed, delayed, or made a reduced payment in March 2021, while 4.9% homeowners (2.33 million) missed their mortgage payment.
"The rapidly improving economy and labor market, increased vaccination rates, and promising trend of declining COVID-19 cases all bode well for those who are still facing unemployment or underemployment because of the pandemic," said Engelhardt. "However, millions of families are still facing economic distress, despite improving conditions since last March."
Overall, 23.7% of renters and 14.2% of homeowners have missed at least one housing payment during the pandemic, but only 8.6% of renters and 6.8% of homeowners missed more than two payments.
The report found that landlords continue to play a key role in helping renters, with 76.3% of renters making all their rental payments over the last 12 months, 10.7% having missed one payment, 4.4% missing two payments, 2.5% missing three payments, and 6.1% missing four or more payments. On average, in Q1, 9.8% of renters received permission from their landlord to delay or reduce their monthly payment.
Rental property owners reportedly lost as much as $7.85 billion in Q1 revenue from missed rent payments, up from over $7.41 billion in Q4. Over the past year, aggregate missed rental payments have reached $35 billion.
RHIA’s analysis concluded 85.8% of homeowners made all their mortgage payments, with 5.6% missing just one payment, 1.8% missing two payments, 1.4% missing three payments, and 5.4% missing four or more payments. On average, in Q1 of 2021, 16.0% of homeowners received permission from their lender to delay or reduce their monthly payment (by week), down from 17.8% in Q4 of 2020. In aggregate, total missed mortgage payments were estimated to be approximately $13.2 billion for Q1 of 2021, versus $14.5 billion for Q4 of 2020. Over the first year of the pandemic, aggregate missed mortgage payments reached almost $68 billion.
Of those receiving unemployment insurance (UI) benefits, the number of renters rose from 3% at the beginning of April 2020 to 7% by the end of September. UI benefits have trended down very slowly since, to just over 6% in the first two weeks of April 2021. The share of homeowners receiving unemployment benefits has trended slightly down to approximately 7% in the first two weeks of April 2021.
"The expected acceleration in hiring and economic growth during the rest of the year should help most affected households resume their housing and student debt payments before expanded unemployment benefits expire at the end of September,” said Edward Seiler, Executive Director of the RHIA, and MBA's AVP of Housing Economics.
Click here to view RHIA's "Housing-Related Financial Distress During the Pandemic" report.