Struggling Rental Market Could Usher in Next American Housing Crisis

A large number of renters have been unable to pay some or even all of their rent since March, when the pandemic temporarily shut down most businesses.

Federal and local eviction moratoriums have protected many of them from losing their homes if they missed payments during the pandemic.

Renters will then be on the hook for months of missed payments, which even those who have jobs could struggle to pay.

Estimates of total outstanding rent debt vary widely.

Yet by any measure, the fallout from missed rent payments is bound to imperil a large swath of the U.S.

A study of unemployed workers released last week by the Federal Reserve Bank of Philadelphia calculated outstanding rent debt would reach $7.2 billion before the close of 2020.

But about a quarter of American renter households with children are now carrying debt from not paying rent, U.S.

In the early weeks of the pandemic, many renters tried to scrape together their rent by borrowing money from friends or family.

Some moved to credit cards, which could mean the total debt tied to rent is greater than what can be counted from missed payments alone.

Kate Bulger, a financial counselor specializing in housing debt at the Money Management International counseling firm, said the number of tenants she works with who report putting payments on credit cards has exploded.

Some landlords are charging punitive late fees on top of what is already owed, making the debt higher than just the face value of the rent.

This kind of negative information on a credit report also makes it more difficult to secure new housing accommodations, and future landlords could require a higher security deposit or advance rent payments.

An analysis of rent payments in 11.5 million professionally managed rental apartments shows that unpaid rent was 7% higher in those buildings between April and August this year than it was during the same months in 2019.