Rising rent prices, financial woes and jobs in flux are just some of the pandemic pressures facing renters today. The pandemic has affected careers, influenced the housing market and changed American households. Renters are shifting their financial management strategies accordingly.
“This COVID-19 situation has been a punch in the throat,” author, former radio host and personal finance expert Chris Hogan told Apartment Guide in 2020. “It has caught a lot of people off-guard and it has caused some hardships. People have lost jobs, people are stressing about being able to feed their kids, people are worried about where their next meal is coming from. People are stressed out and having to make decisions about keeping the lights on vs. putting food on the table.”
Renters are adjusting to meet these new challenges. They’re recalibrating their household budgets and finding creative ways to reach their financial goals.
For many renters, buying a home is now well out-of-reach
Deciding whether to rent or buy a home got complicated during the pandemic. Historically low home inventory, affordable interest rates and a cut-throat real estate market sent median home prices to record highs in June. Competition for available units is fierce.
Bidding wars are frequent, so it’s common to pay more than the list price. That means it can be costly for renters to enter the housing market. Experts recommend spending 30 percent of gross income on housing costs, a goal that is unrealistic for many.
The pandemic also changed what Americans wanted from their homes and neighborhoods. Stay-at-home orders made some people crave more interior and exterior living space. Financial pressures prompted many renters to relocate to cities with a lower cost of living. Some moved in with friends and family members. Residents left more populated urban centers in highly developed (and expensive) real estate markets and relocated to more affordable neighborhoods, small towns and suburbs.
Meanwhile, rent prices are up almost 10 percent
The average price of rent increased during the pandemic too, but not as sharply as housing prices.
The cost of a one-bedroom apartment rent rose 8.3 percent nationwide between July 2020 and July 2021. The average price of a two-bedroom apartment increased by 8 percent during the same period.
“The true financial dream isn’t about owning a home,” author, podcast host and personal finance expert Suze Orman told Apartment Guide last year. “It’s about being secure with whatever you’re doing with the money that you have.”
Millions of vulnerable Americans are falling behind on rent
National Equity Atlas reports that 6.4 million renter households in the United States were behind on rent payments during the first week of July. That’s 15 percent of all renter households.
“Those who have fallen behind in their rent are among the most vulnerable members of society: more likely to be unemployed, with less income and less education,” stated a Moody’s Analytics report in January 2021. “Only one in four still has the sources of income they used prior to the pandemic to cover their rent payment and other expenses.”
Of the renters we surveyed, 25.1 percent reported falling behind on rent payments at some point during the pandemic. But when we asked if they were currently behind on rent, 62.7 percent said yes. This potentially puts them at risk of eviction.
Most renters behind on rent make less than $100,000
Renters who fell behind on rent during the pandemic came from all income brackets. But the majority (92 percent) reported household incomes of less than $100,000 a year. Renters with an annual household income of $25,000-$49,999 were most likely to report being behind on rent during the pandemic (29.3 percent). A significant portion (23.2 percent) of renters making $10,000-$24,999 a year also fell behind on rent.
Renters aged 45-60 had the most difficulty paying rent — 39.5 percent reported that they fell behind on rent payments during the pandemic. Adults 18-29 noted similar challenges — 28 percent said they’d fallen behind on rent as well. Another 24.2 percent of renters 30-44 couldn’t keep up with rent payments during the pandemic either. Only 8.3 percent of renters 60+ struggled to pay rent during the pandemic.
More women (57 percent) had difficulty paying rent than men (43 percent). The entire country was affected. But more renters in the South Atlantic (21.3 percent), Middle Atlantic (17.8 percent) and Pacific zones (15.3 percent) had the most difficulty paying rent.
Rent is up for nearly one-third of renters
The majority of renters (65.8 percent) that took our survey said their rent payment remained the same during the pandemic. Just over a quarter (28.3 percent) said their rent increased.
Of those who said their rent payment increased, many (45.2 percent) noted that their rent costs increased by 10 percent or less. Another 28.8 of renters reported a rent increase of between 10 and 20 percent. An additional 12.9 percent said their rent went up 20 to 30 percent. An unlucky 8.7 percent reported a rent hike of more than 30 percent.
Rent payments decreased for just 5.76 percent of respondents. Many renters took lowering their rent payments into their own hands.
Nearly a quarter (23.3 percent) of renters we surveyed talked to their landlords about a rent deferral plan or a payment plan. Another 13.4 percent moved to another apartment to reduce housing costs. An additional 27.1 percent of renters are planning a similar cost-cutting move in the future. However, nearly 60 percent of renters are unsure about their plans to move to lower their rent bills.
Of those that plan to move to another apartment to save money, 28.9 percent plan to find a new apartment within the next six to nine months. Another 25.9 plan to move in three to six months and 17.9 say they’ll move in nine to twelve months.
Household consolidation has run rampant in the pandemic
Splitting expenses between a larger group of people is a common way to lower rent prices for everyone. Almost a third of renters we surveyed (30.8 percent) reported combining households during the pandemic. Another 11.4 percent planned to combine households in the future.
Of the renters who consolidated their households during the pandemic, 11.6 percent moved in with family and 9.6 percent welcomed family members into their home. An additional 9.5 percent took on additional roommates to lower expenses.
Younger renters had more fluid living arrangements. Renters in the 18-29 age group showed the most flexibility in their household configurations — 18.7 percent moved in with family, 16.5 percent took on roommates and 12.2 percent welcomed family members into their homes during the pandemic.
Renters aged 30-44 were more likely to move in with their families (12.9 percent) or have family members move into their homes (10 percent). Only 8.5 percent of renters in this age group added new roommates to their households to save money.
Adults 45-60 were most likely to resettle their family in their homes (10.2 percent.) Renters in this age group were slightly more willing to move in with roommates (8.6 percent) instead of moving into a family member’s house (8.1 percent).
People over 60 were the most likely to stay in place. A small percentage (6 percent) moved in with family members during the pandemic, while another 4.5 percent resettled family members into their own homes. Just 1.5 percent of renters 60+ took on roommates.
More than half of renters have faced a career disruption …
The pandemic didn’t just shift the housing market. It altered the career trajectories of millions of Americans as well.
The national unemployment rate dipped to 5.4 percent in July 2021. That’s 4.8 points lower than a year before, but well above the pre-pandemic average. The national unemployment rate peaked at 14.8 percent in April 2020 — the highest level since measurements began in 1948. And Americans are still reeling from the financial fallout.
Just over half (50.8 percent) of survey takers said the pandemic impacted their jobs in a negative way. The most common financial setbacks were reduced hours (20.1 percent) and pandemic-related job loss (15.3 percent). Another 8.2 percent of respondents were forced to make a career change, while 7.1 percent of workers we surveyed took a pay cut.
… and they’re now looking for new jobs
U.S. employers have added jobs, but Congressional Research Services (CRS) states that, as of July 2021, “aggregate employment remained 5.4 million jobs below its pre-recession level.” The leisure and hospitality, education and government sectors recorded the most job losses during the pandemic.
The July CRS report notes that unemployment didn’t affect all parts of the workforce equally. Younger workers, those with lower education levels, and workers who identify as Black or Hispanic were more likely to experience unemployment.
Even workers who currently have jobs are reevaluating their options. Bankrate’s August Jobseeker report notes that 55 percent of working adults plan to look for a new job in the next 12 months. It’s all part of a movement nicknamed “the great resignation.”
Many workers are opting for more flexible jobs that allow them to work from home, choosing occupations with benefits or lobbying for higher salaries that keep pace with inflation. Parents of children too young to be vaccinated may be forced to work from home or accept part-time or contract work because they’ve lost daycare options or the Delta variant threatens in-person schooling.
The cost of housing is a major driver for career change
Over half of survey respondents (51.2 percent) said they plan to look for a new job this year or next year. The cost of housing major factor in this decision for 43.3 percent of respondents. And 40.5 percent said the cost of rent was the primary reason for switching jobs.
More than half (54.7 percent) of renters in homes with a household income of $49,999 or less planned to find a new job to help cover housing expenses. An additional 47 percent of workers in homes that made $50,000 to $99,999 annually and 52.1 percent of renters in households that earned between $100,000 and $149,999 a year said the same. The sample size for household incomes greater than $200,000 was too small for accurate analysis.
Younger workers are more willing to change jobs. A higher percentage of workers ages 18-29 (63.3 percent) and 30-44 (60.9 percent) report planning to switch jobs, compared to 50.6 percent of workers aged 45-60. Only 21.9 percent of renters 60+ reported the same plan.
Nearly half of renters have a new side hustle
Many people don’t stop working when their job is eliminated. Some cobble together a collection of part-time jobs or gig work. Others turn a hobby or freelancing into a side hustle. A Harris poll revealed that roughly one in three American workers (or 34 percent) had a side hustle in December 2020. Almost half of the people with a side hustle (49 percent) were parents with kids under the age of 18.
Many of our survey respondents (44.47 percent) also took on freelance work or a side hustle during the pandemic. The most common reason for starting a side gig was to help pay bills (21.1 percent). Another 15.9 percent got a side hustle for extra spending money, while 7.4 percent saved or invested the additional income.
Younger respondents were more likely to have a side hustle. More than half (56 percent) of renters 18-29 said they had a side gig, followed by 49.4 percent of adults 30-44 and 43.8 percent of renters 45-60. Only 21.4 percent of adults over 60 had a side job.
Slightly more men (45.8 percent) than women (43.5 percent) reported having a side gig. Income seemed to matter less than age and gender. An equal amount (46.5 percent) of renters in the $0-$49,999 and $50,000-$99,999 annual income brackets told us they had a side hustle. A smaller percentage (33.3 percent) of renters who made $100,000-$149,999 took on freelance or side work.
Only one-third of renters have gotten a (small) raise
Median salaries for U.S. workers are increasing at a rate of 3 percent as of June 2021, according to The Conference Board research association. That’s on par with pre-pandemic levels, but it doesn’t keep up with the pace of inflation. The Consumer Price Index (which tracks the prices of goods and services and serves as a measure of inflation) rose 5.4 percent over the past 12 months.
Just over a third of survey respondents (34.6 percent) got a raise during the pandemic. Of those who did, the largest percentage (14.3 percent) earned a raise of between 2 and four percent — or right around the national average. Another 11.1 percent saw their paychecks increase by 2 percent or less. The smallest percentage (just 9.3 percent) enjoyed a raise of 5 percent or more. Even that might not be quite enough to keep up with inflation.
The more a renter was paid, the more likely it was that they’d gotten a raise during the pandemic. Just 24.6 percent of renters with an annual household income of $49,999 or less got a raise during the pandemic. More than twice as many (44.8 percent) people with a household income of $50,000 to $99,999 received a raise during the same time period. The majority (60.7 percent) of workers with a household income of $100,000-$149,999 saw their pay increase during the pandemic.
Renters’ top financial goal? Invest.
The pandemic forced renters to re-evaluate their financial goals and revise their financial planning strategies. Our survey respondents took a long view of their financial picture. Investing topped their list as their No. 1 financial concern, followed by retirement planning and saving to buy a house.
Both Suze Orman and Chris Hogan recommend that renters focus on reducing consumer debt first. Then renters should create a savings account with enough money to cover three to eight months of living expenses. After this safety net is in place, renters can learn how to invest, how much to save for retirement and how to save for a house.
For now, many renters are focused on essentials
But not all renters have the luxury of saving and investing in the future right now. Others are just trying to survive. The experts say focusing on the essentials during a financial crisis is a smart strategy.
“So, if you’ve had hours cut back or you’ve lost a job or been laid off, well, you can’t attack debt right now,” said Orman. “Right now what you’re doing is going into what I’ve been calling ‘conserve mode’ — where you’re setting aside every extra dime and being really intentional about taking care of the four walls. And by four walls, I’m talking about you’re taking care of your housing, your utilities, you’re making sure that you have food on the table and gas in your car.”
Where renters can turn for help
Renters at risk of eviction should draft a rent deferral or a rent payment plan and make sure their landlord or property manager has a copy.
Following that, renters can access rental assistance and eviction protection programs. Congress has made a record amount of rental assistance funding available, but it takes time for that money to be distributed to those who need it.
The interactive Regional Housing Legal Services map details eviction assistance programs by state. The U.S. Department of Housing and Urban Development (HUD) and the Apartment Guide Eviction Resource Guide also describe list eviction protections.
The National Low Income Housing Coalition (or NLIHC) maintains a list of emergency rental relief programs and rental assistance options. The Consumer Financial Protection Bureau (CFPB) features resources for active duty service members, emergency rental assistance programs across the nation and advice in eight different languages.
Help with household expenses
A number of assistance programs are available to allow a renter’s every penny can go toward rent and utilities. Renters can call 211 or search 211.org to connect with local health and human service agencies, food and clothing banks and utility assistance programs. Many of the rental assistance databases listed above also connect renters with other services.
Mutual aid groups, faith-based organizations and local non-profits also operate relief programs. Renters can start with their neighborhood, city and county, asking for referrals. There is a vast and complex network of support systems available.
Feeding food-insecure Americans
As many as 50 million Americans didn’t have enough to eat in 2020. And food insecurity and risk of eviction go hand-in-hand. Using nutrition assistance programs for food frees up additional money for rent and utilities.
Options include federal assistance programs like SNAP and WIC. Or renters can try Pandemic EDP Food Support and backpack programs for kids. Additional resources include emergency nutrition assistance programs, food pantries, communal meals and city, county and state services. Mutual aid groups, houses of worship, community gardens and non-profit organizations also offer support for community members in need.
Personal finance survey methodology
The information presented in this article comes from a Rent.com survey conducted in September 2021.
Approximately 1,250 people participated in the survey. The largest group of survey-takers (35.7 percent) was 45-60 years old. The smallest group (16.2 percent) was over 60. Another 26.3 percent were in the 18-29 age bracket, while 21.8 percent were aged 30-44.
Our respondents were slightly more female than male. Just over half (53.5 percent) were female and 46.5 percent were male.
Survey results are subject to response biases because they are self-reported.