American renters who work in food and retail industries can find themselves spending 40% of their annual income on housing costs if they are unable to work for two months — up about six percentage points from their current rent burden.
As local governments limit or close businesses to stop the spread of the coronavirus, different measures have been proposed to alleviate the financial hardships facing employees. Zillow analyzed how a short-term loss of income could affect renters\\\’ finances, and what effect these proposals could have on housing affordability for workers in some hard-hit industries if they are out of work for two months.
Single earners working in food or retail could expect to spend a median of 33.6% of their income on rent. Missing just two weeks\\\’ worth of paychecks would raise that to 35% of their annual income. And if they are out of work for two months, they could spend 40% of their income on housing, absent any other source of money. According to previous Zillow research, only 51% of renters say they can afford an unexpected $1,000 expense, and most renters (66%) already make at least one sacrifice to afford their rent1. The first sacrifice renters make is cutting back on entertainment, followed by picking up additional work — which may not be an option right now.
As the economic impact of shutting down or severely limiting the operations of restaurants, retail shops and other businesses grows, plans to address the gap in income have been proposed, including a one-time payment of $1,200 per single adult and $500 per qualified child. A one-time payment similar to this legislation would ease some of the financial strain on renters who are out of work for two months, lowering the share of annual income needed to cover the year\\\’s rent from 40% to 35.8%.
Two months with no income would push food and retail workers to spend more than half of their annual income on rent in San Diego, San Jose, Calif., Denver, Miami, Los Angeles, Riverside, Calif. and Sacramento. A one-time payment would keep their rent burden under 50% in each of these markets except San Jose.
In Las Vegas, 37% of the local employee base works in food or retail, the highest share of any market in this analysis. Rent typically takes up 34.2% of their annual household income — if they missed two months of work, that would jump to 40.7% absent any other money. A one-time payment of $1,200 for each adult and $500 for each child would put their median rent burden at 35.7% of their annual income.
\\\”We\\\’re still in the early stages of understanding exactly what effects the coronavirus will have on the housing market in the long term, but many workers and families are living through an immediate strain as their jobs are cut back and paychecks dry up,\\\” said Zillow Senior Policy Advisor Alexander Casey. \\\”Renters across the country, and in the service industries especially, are already often stretching their budgets. They are likely to see their rent burden increase if paychecks disappear, which also means they\\\’ll have less funds left after paying housing costs for other essentials, which can quickly become devastating. But without drastic measures now to slow the spread of this disease, we risk it worsening, further delaying the economy\\\’s return to business as usual and resuming the livelihoods for these workers.\\\”
Metro Annual
Income
Spent on
Rent Annual
Income
Spent on
Rent – Two
Months with
No Pay Annual Income
Spent on Rent –
Two Months with
No Pay + One-Time
Payment of $1,200
per Adult and $500
per Child Share of Workers
in Food/Retail
United States 33.6% 40.0% 35.8% 20.1%
New York, NY 40.0% 47.6% 41.0% 18.0%
Los Angeles, CA 44.8% 53.3% 45.5% 21.0%
Chicago, IL 33.5% 39.9% 34.4% 18.7%
Dallas, TX 34.3% 40.8% 35.1% 20.2%
Philadelphia, PA 38.9% 46.3% 38.5% 18.2%
Houston, TX 38.9% 46.3% 39.1% 19.3%
Washington, DC 41.3% 49.1% 42.6% 16.1%
Miami, FL 44.8% 53.5% 46.1% 22.8%
Atlanta, GA 34.9% 41.6% 35.8% 19.7%
Boston, MA 35.8% 42.6% 38.4% 17.9%
San Francisco, CA 41.5% 49.4% 43.7% 17.5%
Detroit, MI 32.6% 38.9% 32.1% 19.4%
Riverside, CA 44.1% 52.7% 43.5% 22.4%
Phoenix, AZ 31.6% 37.5% 31.6% 21.2%
Seattle, WA 36.1% 43.0% 39.4% 19.0%
Minneapolis, MN 35.8% 42.6% 36.2% 19.0%
San Diego, CA 46.6% 55.4% 48.6% 21.5%
Saint Louis, MO 30.8% 36.7% 31.9% 19.9%
Tampa, FL 36.5% 43.5% 37.2% 22.0%
Baltimore, MD 36.4% 43.3% 37.4% 17.2%
Denver, CO 45.8% 54.5% 46.9% 19.5%
Pittsburgh, PA 24.7% 29.4% 25.6% 19.8%
Portland, OR 38.8% 46.2% 39.0% 18.9%
Charlotte, NC 30.5% 36.2% 32.4% 20.4%
Sacramento, CA 43.3% 51.6% 42.8% 20.7%
San Antonio, TX 33.6% 40.0% 34.0% 22.8%
Orlando, FL 39.6% 47.1% 41.3% 27.3%
Cincinnati, OH 32.0% 38.1% 32.1% 19.4%
Cleveland, OH 27.0% 32.1% 28.8% 19.7%
Kansas City, MO 28.6% 34.0% 30.3% 18.7%
Las Vegas, NV 34.2% 40.7% 35.7% 37.0%
Columbus, OH 29.5% 35.2% 30.8% 20.3%
Indianapolis, IN 36.0% 42.9% 35.0% 19.9%
San Jose, CA 46.4% 55.3% 52.0% 14.6%
Austin, TX 35.6% 42.4% 36.7% 19.1%
Zillow Research
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In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow Group\\\’s Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists, data analysts, applied scientists and engineers produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Launched in 2006, Zillow is owned and operated by Zillow Group, Inc. (NASDAQ:Z and ZG), and headquartered in Seattle.
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