In April 2020, the US unemployment rate took a new record high-higher than what was experienced during the 1930s economic depression. Still, in April 2021, unemployment rates stand at 6.1%, meaning many households are still in hardship.
So, what could be causing the financial crisis? When the first case of COVID-19 was reported in Wuhan, China, nobody anticipated the virus would soon spread to the rest of the world. Today, it’s raking havoc everywhere and the US is no exception.
Sadly, this is only the tip of the iceberg. The ripple effect is even more devastating.
Food and Housing Crises
Research by the Center on Budget and Policy Priorities shows there’s been an insane increase in the number of households struggling to put food on the table. According to the research, the number stands at 17 million and is still going up.
The pandemic hardship isn’t stopping at that. Besides struggling to get food, households find it a pain in the flesh to keep up with rent and mortgage payments. In a Pulse survey, one in seven renters is behind on rent during the pandemic.
Effect of Rental Crisis during the Pandemic
The obvious effect of the rent crisis is renters being late on rent payments. Before the pandemic, renters had a more steady and predictable income, and comparatively few would miss the rent deadline. However, due to high unemployment rates, this has changed since 2020, and many households are struggling to pay rent.
The worst part is, the crisis isn’t only affecting renters; landlords and property managers are also feeling the pinch. Picture it as a food chain where the landlords and property managers depend on renters for survival. Anything affecting the renters’ source of income will also affect property managers and landlords.
Sadly, falling behind rent payments and other financial obligations can also impact credit scores.
How will Renters and Landlords Come out of the Dilemma?
Times are tough, and renters and landlords alike are in need of a long-term solution. Many renters and property managers caught up in this rental dilemma, have turned to rent rewards platforms like Pinata. Pinata is a startup in the real estate space that bridges the gap between tenants and landlords by incentivizing renters to pay rent on time. Pinata creates a win-win scenario for renters and landlords.
Renters receive incentives whenever they pay rent on time and also have the option to boost their credit scores. Landlords win by encouraging on-time payments, and improving tenant relationships. The best part, Pinata has a credit reporting capability that tracks renters’ payment history, and then updates the major credit bureaus.
Unfortunately, the ripple effects from the ongoing pandemic will likely be here for years to come, and there’s nothing we can do about it. Fortunately, innovative new solutions help to ease some of the burden during this time of uncertainty.