The recently unemployed service-sector workers currently benefitting from the local and federal unemployment assistance owe more than $1.7 billion in rent and mortgage each month, a recent data analysis reveals.
An analysis by Zillow of data coming from the U.S. Census Bureau and the U.S. Department of Labor has highlighted the scope of risk that the housing market economy is exposed to if the government assistance should fall short and income and or savings continue to diminish. However, the study is limited to unemployed Americans who are currently receiving aid due to the pandemic.
The report noted that among those who filed for unemployment protection, in 19 states and the entire U.S., food services and accommodation industry workers have the largest share. Other groups that were hit the hardest by the pandemic include the arts, entertainment, and recreation industry workers who were represented in 12 more states. Combined, they represent the wider service sector owing more than $1.72 billion monthly payments across the country.
Across the U.S., the newly unemployed workers from the food industry had the largest share of total housing payment in its industry owed by the recently unemployed workers with 26.3 percent or $873.31 million of owed housing payments.
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The recently unemployed workers in the service sector are currently benefitting from the $2.2 trillion CARES Act, allowing them to stay afloat while the nation grapples with the coronavirus pandemic. As cited by Zillow, the first week of April, data from the National Multifamily Housing Council (NMHC) revealed that 22 percent of households did not pay their monthly rent. A sign of the immediate impact the lockdowns had on American households.
However, the unemployment benefits and the stimulus package helped cushion this impact as the number of households not meeting their monthly rental payment obligations has diminished to 20 percent in May, following its implementation in mid-April.
While millions who have lost their jobs are currently getting temporary relief, the assistance programs are limited and will not last for long, the report noted. The CARES Act eviction moratorium, for one, applies only to federally-backed mortgage loans. Add to that, those that qualified for the forbearance are still to pay their missed payment once forbearance period ends.
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In April, almost half of homeowners in forbearance were able to pay their mortgage; however, as of May 26, only 22 percent of households in forbearance have made their May payment, according to the Black Knight's Mortgage Monitor Report report.
The report said that data could be signaling another uptick in the rate of delinquency nationwide once the May data come out, while the impact of the unemployment benefits ending on July 31 on delinquencies and forbearance requests is still uncertain.
Meanwhile, a positive development revealed in the data points to the equity positions among those homeowners who are in forbearance. Almost 80 percent of households in forbearance has 20 percent or more home equity. This strong home equity, the analysis explains, provides homeowners, servicers, and regulators with options so foreclosures and default-related losses can be prevented.
