U.S. Renters May Need $12B in Monthly Support
- Mar 31, 2020
Renters across the U.S. may require $7 billion to $12 billion each month in temporary assistance over the next three to six months as the coronavirus puts a deep freeze on the economy, according to a new report by data and analytics firm Amherst. The company estimates that anywhere from 15 to 26 percent of all rental households will feel significant pain from the temporary business closures that have already led to millions of unemployment claims.
The analysis comes as property owners brace for the possibility that large swaths of America will be unable to pay rent on April 1. Apartment landlords collect more than $22 billion in rent in an average month, according to CoStar data cited by Bloomberg. California last week placed a statewide moratorium on evictions, following similar measures to protect renters in other jurisdictions including New York State this month.
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Coronavirus-related business shutdowns are likely to have the greatest impact on hourly wage workers, especially in the leisure, hospitality and transportation industries. Manufacturing, construction and retail trade employees will also feel the effects. Focusing its analysis on this cohort, Amherst presents a base case scenario in which 15 percent of the nation’s renter households are affected by the closures, requiring about $7.1 billion in rental payment support.
In the more extreme scenario, an estimated 26 percent of renter households will need a total of $12.2 billion in assistance. These figures imply total rental support ranging from $20 billion to $35 billion if business activity restarts in three months. A six-month shutdown would entail double the cost.
Some regions harder hit
Amherst’s scenario draws on a 2018 Census Bureau survey that found the U.S. had 43.8 million renter households paying a median rent of $1,058. The company assumes that COVID-19 closures will have a negligible effect on salaried renters, although this category of workers are also vulnerable to layoffs and reduced pay.
The effects will be felt unevenly across the country based on industry concentrations and the proportion of residents who rent. Breaking down its analysis by congressional district, Amherst finds that Las Vegas and Miami may need more support than other areas given their high concentrations of entertainment industry workers. Atlanta, which has a significant number of transportation jobs, is also expected to require more assistance, along with manufacturing-heavy states including Ohio, Michigan, Indiana, Texas and North Carolina.
The Federal Reserve Bank of St. Louis recently projected total job losses of 47 million, translating to a 32.1 percent unemployment rate, as efforts to contain to the virus exact a mounting toll on the economy.