Thousands of renters could be evicted from their homes in the next few months, leading to a housing crisis that could have major ripple effects on the economy.
A recent study by the Federal Reserve Bank of Philadelphia, which surveyed unemployed Americans, found that outstanding rent debt would climb to $7.2 billion before the end of 2020, the Wall Street Journal reported.
Meanwhile, Moody’s Analytics projects that the rent debt could reach close to $70 billion by end of the year unless there is additional stimulus funding. At that time, an estimated 12.8 million Americans would owe an average of $5,400 from missed payments, according to Moody’s.
Many tenants have been unable to make their rent payments since March, as businesses closed and unemployment rose, according to the Journal. These renters have been allowed to stay in their homes thanks to federal and local eviction moratoriums, but these moratoriums are set to expire by January or sooner, leaving millions of Americans to either meet their back payments or face eviction.
Once the moratoriums expire about 30 million to 40 million people across the country face eviction, according to the Journal, citing estimates from federal government officials.
In the meantime, many renters are piling up credit card debt. Credit payments to small and medium-size businesses tied to rental real estate rose by more than 70 percent in the spring, according to the Philadelphia Federal Reserve.
[WSJ] — Keith Larsen