Renters are expected to owe billions in missed payments by the end of the year without additional stimulus funding, according to two new analyses.
Senate Republicans have made clear they would oppose any large-scale stimulus deal reached between House Democrats and the Trump administration, at least ahead of the election, after balking at multiple Democrat-passed relief bills since May. But an analysis by the Federal Reserve Bank of Philadelphia found that another round of $1,200 stimulus payments and a clean extension of the $600-per-week federal unemployment boost that Republicans have long opposed could help millions of Americans stave off potential homelessness.
While most renters are protected from eviction by a Centers for Disease Control and Prevention directive, which expires at the end of the year, missed payments have been piling up. The Philadelphia Fed estimates that the outstanding rent debt could reach $7.2 billion by the end of the year.
“Like the patchwork of state and local moratoriums preceding it, the temporary [federal eviction moratorium] has protected many renters from the threat of losing their homes in the middle of a pandemic. However, our analysis suggests that this stopgap measure has left millions of additional households, many owing thousands of dollars of back rent, at risk when the moratorium expires,” the researchers wrote. “These households are primarily those with workers who lost jobs yet did not receive state or federal UI [unemployment insurance] (and other associated CARES Act provisions).”
That analysis likely does not show the full scope of rental debt. Another Philadelphia Fed analysis by the Consumer Finance Institute also found that credit card payments to businesses connected to rental real estate increased by more than 70% this spring and remained about 50% higher through the fall. That suggests many renters have cleared their rental debts only to rack up credit card debts with mounting interest rates to get by.
“Even if now they are able to make their rent payment,” Kate Bulger, a financial counselor at the counseling firm Money Management International, told The Wall Street Journal, “that huge inflation to their credit-card debt has become a new threat to their budget and their ability to cover all their expenses.”