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While Congress bats around a pandemic relief bill that could come with a $1.9 trillion price tag, millions of Americans still feel they could lose their homes because they owe thousands.
The Mortgage Bankers Association (MBA) released on Monday a report that says 5 million households failed to pay their rent or mortgage in December, and 2.3 million renters and 1.2 million mortgagors feel they’re at risk of eviction or foreclosure or could be otherwise forced to move in the next 30 days.
And those numbers have actually come down a bit from earlier in the pandemic, according to the fourth-quarter report from the Research Institute for Housing America (RIHA), the MBA’s research and education arm.
For instance, the report found that 2.62 million renters (7.9%) and 2.38 million (5%) mortgagors missed payments in December, down from about 6 million households who missed payments in September (8.4% of renters and 7% of mortgagors).
Landlords continue to 'play a key role' while taking a hit
“Property owners continue to play a key role in helping renters,” the MBA says, noting RIHA research shows 12% of renters got permission from their landlord to delay or reduce their monthly payments.
That’s while rental property owners continue to take a big hit, losing up to $7.2 billion in fourth-quarter revenue from missed rent payments, although, again, that’s down more than 20% from more than $9.1 billion in the third quarter. Total missed mortgage payments in the fourth quarter also fell about 27%, to $14.2 billion in the fourth quarter from $19.4 billion in the third quarter.
The report says that 5.3% of mortgagors missed one payment, 2% missed two payments, 1.5% missed three payments, and 4.9% have missed four or more payments as of the end of the year. Of that group, around 18% of mortgagors received permission from their lender to delay or reduce their monthly payment, the MBA says.
The biggest pain point may be student debt. The report says that as of December, 43% of borrowers there have missed a monthly payment, after that figure had held steady at around 40% since May.
Financial stress continues amid some growing optimism
Gary V. Engelhardt, an economics professor at Syracuse University, says in the MBA announcement:
Gradual improvements in the labor market and economy helped more renters and homeowners make their housing payments at the end of 2020. However, the COVID-19 pandemic continues to cause financial stress for millions of Americans, and particularly for those who rent and have student loan debt. Despite 5 million renters and homeowners not making their December payment, fewer believe they are at risk of eviction, a foreclosure, or would be forced to move in the next 30 days. This confidence is perhaps an indication that direct checks and enhanced unemployment benefits, rental assistance, mortgage forbearance programs, and a federal eviction moratorium have so far been effective in keeping people in their homes.
The Millionacres bottom line
The financial stress of the pandemic continues to hit Americans hard while the vaccine rollout adds hope that a recovery is looming. That’s desperately needed to put people back to work so they can pay their rent and mortgages.
As Bloomberg reports: “Some 10 million Americans remain without work because of the fallout from the COVID-19 virus. Almost 40% of the unemployed have been jobless for 27 weeks or more, and uncertainty about the virus or rollout of vaccines continues to hold back hiring and activity.”
And this from Edward Seiler, executive director of the MBA’s RIHA: "The distribution of several effective vaccines will hopefully slow the pandemic. In the meantime, providing targeted relief for those facing hardships until the 'new normal' will be key to preventing wider disruption to the housing market and overall economic recovery."
Keep an eye on that stimulus bill, with its billions in relief for renters and an extension of the federal eviction moratorium, not to mention lots of potential goodies for real estate investors. This is far from over.
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