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BlogArrowPersonal FinanceArrowWill Americans’ Personal Finances Survive the Pandemic?
Personal Finance Jan 05, 2021

Will Americans’ Personal Finances Survive the Pandemic?

Andrew Syrios
Expertise: Mortgages & Creative Financing, Business Management, Landlording & Rental Properties, Commercial Real Estate, Real Estate Deal Analysis & Advice, Real Estate Investing Basics, Personal Development, Real Estate News & Commentary
219 Articles Written
Young woman looking for something in her purse

Few have been spared from the wrath of the coronavirus, whether the impact felt was physical, emotional, or otherwise. New data out from Visual Capitalist delve into the toll the pandemic is taking on our personal finances.

Based on an analysis by doxoINSIGHTS, Visual Capitalist compiled the net effects of COVID-19 into an eye-opening graphic. Needless to say, it hasn’t been good.

Per Visual Capitalist

Of course, we do need to take all of these types of studies, surveys, and statistics with a grain of salt. For example, back in April, The New York Times ran a piece claiming 31% of tenants could not pay their rent next month. Thankfully, that did not come to pass.

And while many states have eviction moratoriums in place right now—which when lifted, will almost certainly amount to a significant uptick in evictions and foreclosures—the 2008-like tsunami many were predicting is unlikely to come. Hopefully, the latest stimulus package that was passed will help tide Americans over (despite the pork in it) without contributing too much to the increased inflation that is bound to come.

Related: What Every Investor Should Understand About Inflation

That being said, although it’s worth pointing out the hyperbole and fearmongering out there, it’s no understatement to say the pandemic and lockdowns have hurt Americans badly. Visual Capitalist sums it up well noting:

  • 57% of consumers’ incomes have taken a hit in the past seven months
  • 70% have delayed discretionary spending on big purchases
  • 75% continue to be very worried about their future financial health

Furthermore, it points out that,

“Unsurprisingly, worrying about personal finances also means that more Americans are deferring their bill payments during the pandemic. However, these vary depending on the type of bill, total amount, and immediate urgency.”

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Here’s a chart illustrating those deferments:

Per Visual Capitalist

Unfortunately, the analysis offers no baseline from previous years for comparison. Nor does it specify whether these payments were eventually made up (i.e., paid late) or permanently skipped. This has been extremely common among these sorts of reports.

Related: 9 Ways to Save Money You Have Probably Never Tried

One analysis from the National Multifamily Housing Council does keep running data, which makes it easier to compare. According to their information, in December 2019, 93.2% of tenants paid rent. In December 2020, it was 89.8%. (For November 2019 and 2020, the gap was closer—91.9% and 90.3% respectively.)

Sure, this is a noteworthy difference (3.4%), but it doesn’t qualify the scary headlines we have seen in many publications.

A more likely trend is that people are reducing their expenditures by dropping various services. DoxoINSIGHTS’ study also looked into whether people are likely to skip various payments in the future (or drop those services if they can).

Per Visual Capitalist

I anticipate a lot of Americans will stop paying for their alarm, drop their health insurance or life insurance, or at least stop subscribing to things likes Hulu, Netflix, or Amazon Prime. Hopefully, these types of sacrifices will only be for the short-term, but we shall see.

Related: What the December Coronavirus Stimulus Might Mean for Real Estate Investors

I don’t expect 28% of Americans to miss their rent as the report suggests. But I do suspect many are worried about it, as they don’t have much in savings. Per the report, while about half of Americans have at least three months of savings, just over a third have less than one month’s worth.

Per Visual Capitalist

Of course, this doesn’t take into account the ability of people to ask friends or family for assistance or receive charity or government help. Even still, it is highly concerning that a full 35% of respondents believe they have less than one month of savings.

Again, I urge caution with all of these surveys and studies coming out. The economy is unlikely to completely collapse. but we are likely to see inflation, slow growth, and a noteworthy increase in both foreclosures and evictions. Furthermore, the average American has taken a hit, many small businesses have been hurt badly or gone under, and wealth inequality has increased substantially, which will likely continue to increase political instability.

In other words, while things are better than they were in April, things still aren’t good. I would definitely not tell people to simply sit on the sidelines and wait right now. But as I recommended back in April, it’s still wise for real estate investors to proceed with caution.

What statistics have you encountered surrounding the impact of COVID-19 on Americans’ wallets? Were the claims believable or blown out of proportion?

Share your thoughts in the comment section below.

By Andrew Syrios
Andrew Syrios has been investing in real estate for over a decade and is a partner with Stewardship Investments, LLC along with his brother Phillip ...
Read more
Andrew Syrios has been investing in real estate for over a decade and is a partner with Stewardship Investments, LLC along with his brother Phillip and father Bill. Stewardship Investments focuses on the BRRRR strategy—buying, rehabbing and renting out houses and apartments throughout the Kansas City area. Today, they have over 300 properties and just under 500 units. Stewardship Properties on the whole has just under 1,000 units in six states. Andrew received a Bachelor's degree in Business Administration from the University of Oregon with honors and his Masters in Entrepreneurial Real Estate from the University of Missouri in Kansas City. He has also obtained his CCIM designation (Certified Commercial Investment Member). Andrew has been a writer for BiggerPockets on real estate and business management since 2015. He has also contributed to Think Realty Magazine, REI Club, Elite Daily, Thought Catalog, The Data Driven Investor and Alley Watch.
Read Less
7 Replies
    Glenn Verley New to Real Estate from Apple Valley, CA
    Replied 10 days ago
    With the amount of people who live paycheck to paycheck, I'm surprised there isn't a higher percentage of people who have less than 1 month saved. It's also surprising that rent and utilities are pretty high on the "skip/expected to skip" payments, but I guess it makes sense with the eviction moratorium. But I wonder how many people have the money and just decided not to pay rent (how many are 'professional' tennants)? Interesting article!
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied 6 days ago
    I would think the number who have money and decided not to pay is relatively low. Eventually these moratoriums are going to end and everyone knows that. But I'm sure there are some.

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    Jorge Chang Real Estate Investor from Santa Clara, California
    Replied 10 days ago
    meanwhile, another report claims that personal saving rate has gone up dramatically due to covid and hence (combined with lower interest rate) fuels the raise of various asset including stocks, real estates, etc. https://www.nytimes.com/2021/01/01/upshot/why-markets-boomed-2020.html?fbclid=IwAR3CvjHBsrdycQENxJw48grBEN3gy_wc54bJPOhP2LMeMAvv3bor9SfUHPo

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    David Alan Griffin
    Replied 10 days ago
    I agree with Glenn Verely. As a landlord, I can rarely let a tenant go past one month in arrears on rent. A lot of tenants are purchasing Big screen TV's and other items in lieu of paying rent. It could be the rent moratorium or just the fact that their financial IQ is so poor. Probably a lot of both.

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    Susan Maneck Investor from Jackson, Mississippi
    Replied 10 days ago
    I don't know about the rest of you, but I was doing fine until the end of the first enhancement. I have one set of tenants now who've been paying about $100 a month since then. I have two other households where the people have been hospitalized for Covid, and I haven't got rent from them this month either. Hopefully they'll catch up some with the stimulus comes but since they don't have checking accounts they don't have it yet.
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied 6 days ago
    We've been doing well but I've heard in some places it's getting tough and delinquency is really starting to creep up. I hope things turnaround for you.

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    G. Brian Davis from Baltimore, MD
    Replied 8 days ago
    Great article Andrew, and a good reminder that even though housing markets and stock markets have popped, the majority of Americans are worse off financially than they were a year ago. Eventually those chickens come home to roost, whether in the form of market corrections, political upheaval (something we've already seen), and other crises.

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