Federal rent assistance for millions of Americans comes to an end starting May 1, 2022. For many, the challenges of affordability and of having to start making payments that have increased exponentially since the start of the pandemic, are way beyond reach. So, what is going to happen?
Many renters have not had to make a rent payment for over two years. It has given millions more freedom financially during this time. Imagine not having a house payment for two years. Some have had on-again, off-again income while others have increased their personal debt. The challenges now are many.
Adding fuel to the fire, the housing market is very rigid. Many homeowners do want to move up, or down because interest rates have climbed so much within the last three months. As a result, less homes are and will be on the market unless a homeowner really needs to move. So for many renters, the options of purchasing a home are very limited. With millions now forced to start making rent payments, a couple of scenarios could play out.
First, many individuals cannot make today’s rent payment for which rent payment assistance has been provided. This could force many individual renters to move in with family or relatives, or combine resources and invite roommates. Either way, this could increase the number of rental units on the market, and possibly partially alleviate the pressure on rents.
Second, some could just decide not pay their rent payments and wait until for the eviction process. This would take a few or several months to play out, depending on the state where the renters live. The problem for the renter is trying to find a new home and then having a property manager / landlord coming after the renter for past due rents.
The government rental assistance has had one bad unintended consequence; more renters staying in an apartment or home, leaving less rental properties on the market. Subsequently, the market rents have gone up. The question now is what happens to the market as all the free money is pulled away. More opportunities to rent should come on the market in the coming months and possibly, rents will settle and not continue to increase.