The COVID-19 Impact Continues: Where Consumers Feel the Effects Most

The COVID-19 pandemic has had a particularly severe impact on renters, minorities, and lower-income households according to the third quarter National Housing Survey^®, as the overall results indicate broad financial and employment repercussions due to the virus. Additionally, survey questions regarding changes in childcare and working from home reveal a considerable impact on many households across the entire survey population.

We began surveying consumers starting in the second quarter about their financial, job, and life experiences due to the sudden and dramatic effects of the COVID-19 pandemic. In the third quarter, we continued to track some of the second quarter questions and added new ones. The trends seen in the second quarter around financial and job impact were consistent in the third quarter.

Despite the significant impact of the pandemic on consumers’ day-to-day lifestyles, and some anecdotal observations of an urban exodus, mobility has not been affected meaningfully at a national level. Housing preferences also remain generally consistent with 2019 mobility data. However, these results should be put in the context that change in the housing sector takes place at the margin rather than across the entire population at once.

Disproportionate Financial and Job Impacts for Lower-Income Households, Renters, and Minorities

The weight of the pandemic on households' financial situation has been widespread: Nearly one-third of survey respondents tell us they have experienced non-voluntary employment changes, including reduced working hours, layoffs, furloughs, pay cuts, or their employers going out of business.

Through the second and third quarters, we observed the consistent effect of the coronavirus pandemic on concerns about paying bills and about job loss, and experience with job loss and furloughs. The impact has been generally consistent over this period and it continues to have a disproportionate effect on the lives and finances of renters, minorities, and those with lower incomes. Our NHS data shows that lower-income households, renters, and minorities are two to three times more likely to be concerned about their ability to pay their bills. They are also significantly more likely to be concerned about job loss and to have experienced job loss or furlough during the pandemic.

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Many More Start Working from Home

In addition to financial outcomes, the pandemic has had a significant effect on the day-to-day experiences of households: Nearly one in five survey respondents have experienced disruption of childcare, one in ten have had family and or friends move in, and one in three are regularly working from home when they normally did not do so. A smaller percentage of those at lower incomes are reporting regularly working at home when they normally did not do so – 22% of those earning less than the area median income (AMI) have experienced working from home in Q3 compared to 38% of those at or above AMI.

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Mobility Consistent with Pre-Pandemic Results

Despite these dramatic shifts, consumers tell us the pandemic has not greatly impacted their mobility – generally, their moving plans have not been accelerated and their housing preferences remain the same as in 2019. When asked about plans to delay or accelerate moving plans due to the outbreak of the coronavirus, the net change is to delay moves. Though the delay and accelerate results differ slightly by survey respondents' self-identified urban, suburban, and rural locations, they all show a similar net delay for moves.

As we observed in Q2, respondents' anticipated timing of their next move has remained stable over the past several years, despite the coronavirus. And, preferences on the location, price, and size of their next home have remained mostly unchanged since 2019.

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How Will COVID-19's Impact on Lower-Income Groups and the Workplace Change Housing?

The pandemic has resulted in significant negative financial and job outcomes for many lower-income households, renters, and minorities – and with no immediate relief in sight, this will likely have ramifications on their ability to own, rent, and sustain a home. The continuing impact of the pandemic is uncertain due to many factors, including COVID cases surging, vaccines being rolled out, the uncertainty of additional stimulus and relief measures, and the path that the economic recovery might take.

Credit scores and savings for upfront housing costs such as the down payment or rental deposit, which are a key to obtaining a home, may be more difficult to maintain and achieve especially for lower-income households, as COVID-related employment changes may make paying bills and saving money more challenging as the pandemic continues. In our Mortgage Lender Sentiment Survey, mortgage lenders reported a tightening of credit standards over the pandemic period, and landlords have tightened their leasing standards, creating additional housing challenges. Smaller landlords (who tend to provide more affordable, unsubsidized rental housing) will also be challenged to sustain their own mortgage payments if their tenants fall behind on their rent. They may need to consider selling their properties to those who may be less interested in preserving affordable rents.

In sum, COVID-19's impact may disadvantage lower-income households, renters, and minorities in the housing market and could sustain or widen the existing gaps they face in their rate of homeownership and wealth building.

While we haven't seen a significant effect on mobility to date, there is also potential for future change when people and their employers navigate a post-COVID world. A significant portion of the population who did not normally work from home is now doing so, especially higher-income workers. A massive global work-from-home experiment is being played out due to the pandemic, which will likely provide data that could accelerate changes in how we work, possibly more than any other event in decades.

Though attitudes about moving and home/location preferences appear to be generally stable during the pandemic, changing work patterns may ultimately have lasting and meaningful outcomes for our life and housing choices that are still to be determined. Employer remote-work flexibility could significantly decrease the needs for local job recruits and the daily commute to the office to allow employees to have even greater home and work location possibilities. Some of the possible changes to come may just accelerate existing trends such as allowing more employees to work remotely more often. This may potentially impact housing preferences if working behaviors change and stabilize, such as investment in building an extra room for an office space. Other possible changes may surprise us as the link between work and home becomes looser. Lower-income employees more often do not have these remote work flexibilities and, as a result, may need to relocate to where their jobs migrate due to the changing work and housing patterns of higher-income employees. An important area of focus going forward will be how these changes that are affecting higher-income households will, in turn, impact the housing of those with lower incomes.

Doug Duncan
SVP and Chief Economist

December 18, 2020