Two Years Into the Pandemic, Americans Are Still Struggling Financially

Americans' biggest pandemic-era financial struggles | Why families are struggling financially | Financial impact of contracting COVID-19 | Living with long COVID | Debt outpaces savings | Renters are living paycheck to paycheck | Missing rent or mortgage payments | Home buyer apprehensions

Two years since the start of the COVID-19 pandemic, Americans are still coping with long-term health and financial impacts.

As the national case count reaches more than 78 million, experts estimate 27% to 33% of those who contract the virus are living with long-term side effects such as fatigue, brain fog, and muscle pain. Meanwhile, rental rates have leapt 17.8% over just this past year, and Americans have quit their jobs in droves, willingly taking pay cuts and leaving behind 10.9 million unfilled jobs in December.

Now, many Americans are behind on rent, and sources report that much of the progress seen in early 2021 has stalled. As the Omicron variant continues to spread, can households weather the financial impacts of COVID-19 for yet another year?

To find out, we surveyed 1,000 Americans about their financial struggles during the pandemic and their expectations for the year ahead.

We found that most Americans have been living paycheck to paycheck at some point during the pandemic, and households are stretched thin, with limited savings to cushion their spending. Two years since the onset of the pandemic, most Americans have bleak outlooks on the housing market, as many have delayed their plans to sell or buy, and interest rates are climbing once again.

This report is part of an ongoing series first published on Clever Real Estate. Previously, we surveyed Americans to learn more about their financial well-being at the beginning of the pandemic (March 2020), one month in (April 2020), six months in (September 2020), and one year in (April 2021).

More Americans Are Living Paycheck to Paycheck During the Pandemic Than Last Year – And 2 in 5 Have No Savings

The stimulus checks and payment moratoriums that helped pad Americans' spending in 2020 and 2021 appear to have been Band-Aids on a broken limb.

Today, 70% of Americans say they've lived paycheck to paycheck at some point during the pandemic – a 15% increase from last year (61%). Plus, 48% of Americans are living paycheck to paycheck right now.

For many, making ends meet means spending money they originally put away for emergencies. But as many spend their savings to pay for basic expenses, 40% of Americans believe that safety net will run out this year.

Even worse, 41% of Americans have nothing in savings. Nearly 1 in 5 (18%) spent their emergency savings before or during the pandemic, while nearly one-quarter (23%) say they never had emergency savings to begin with.

Stress brought on by lack of savings or disposable income also compounds with pandemic-related stresses. While 40% are concerned about new coronavirus variants, 36% are worried about the health impacts of contracting COVID-19 in any form.

Consequently, nearly one-third (32%) of Americans have significant mental health concerns.

One-Quarter (25%) of Americans Have Worked a Side Gig for Additional Income During the Pandemic

Struggles to cover basic expenses have pushed many Americans into making decisions they've never had to before, with some working two or more jobs, taking on additional debt, or spending their savings.

To make ends meet, and for the first time in their lives, Americans have:

• Used emergency funds or savings (28%)
• Worked a side gig for additional income (25%)
• Received food stamps (23%)
• Took on additional credit card debt (22%)

Further, those who have lived paycheck to paycheck during the pandemic are 28% more likely to take on additional credit card debt, 28% more likely to receive food stamps, and 22% more likely to use their emergency savings.

Cutting financial corners or taking from their savings has compounded the stress of financial instability Americans experienced even before the pandemic.

Only 15% of Americans say they feel financially secure, while nearly 2 in 5 (39%) say they're stressed, 31% say they're anxious, and 30% say they're struggling.

The Pandemic Is Disproportionately Affecting Black Americans

13.7% (137) of the 1,000 respondents in our study self-identified as Black, mirroring the general population distribution (12.4% - 14%).

Although the pandemic has hit all Americans hard, the health and financial conditions of the pandemic have exacerbated pre-existing socioeconomic inequalities, leading to disproportionate impacts on Black Americans.

Research from the U.S. Census Bureau and Pew Research Center have detailed the financial precarity many Black individuals and households have reported during the pandemic, and our data mirrors these trends.

Two years into the pandemic, we found that many Black Americans are still struggling and are more likely to need financial relief or to take financial risks than overall respondents. Black Americans are 26% more likely to receive food stamps, while Black homeowners are 37% more likely to have taken out an additional mortgage on their home to cover expenses during the pandemic.

Black respondents were also 43% more likely than overall respondents to say they've spent their emergency savings since the pandemic began.

And with the increased financial strain, Black parents have found themselves with few options when it comes to balancing their children and their work. 70% of parents said they have been impacted by disruptions to childcare or the education system - including 24% of Black parents who said they've had to reduce their hours at work.

Black parents are 46% more likely to say that childcare responsibilities have limited their chances of earning a raise or promotion and 39% more likely to say they've had to reduce their hours at work due to disruptions to childcare or the education system.

However, Black Americans are doing well in other respects. One-third (33%) of Black respondents report they have no non-mortgage debt, and 43% of Black respondents say they are less stressed about the pandemic than they were last year.

Additionally, more than one-third (37%) are optimistic about their financial recuperation and anticipate that their finances will recover within the year.

71% of Families Still Have Not Recovered Financially From the COVID-19 Pandemic

Overall, American households are still struggling to make ends meet two years after the start of the pandemic. Many families have spent more time at home during the pandemic, leaving parents with increased utility expenses as they rearrange their work schedules to accommodate at-home schooling or childcare.

Two in five parents (40%) are stressed about their financial situation, and understandably – 72% of families are currently living or have lived paycheck to paycheck during the pandemic, compared to 66% of Americans with no children.

Anxious about paying for basic expenses, many parents have increased their debt to get by: More than three-quarters (78%) of parents have non-mortgage debt.

Among parents with non-mortgage debt, 60% believe it will take them one year or more to pay it off. Only 23% believe they can pay off their debts within a year.

1 in 4 Parents With Young Children (22%) Worry Disruptions to Childcare Hurt Their Chances of Earning a Raise or Promotion

Interruptions to childcare and schooling over the last two years have left many parents sacrificing their careers to care for their children's needs.

More than three-quarters (80%) of parents who have children under 18 are struggling to balance work with disrupted schooling — and 24% say they or their partner had to become a stay-at-home parent.

As the pandemic forced parents to rearrange their lives, many found it necessary to also rearrange their finances. More than a quarter of parents (26%) report that, for the first time, they worked a side gig for extra income during the pandemic. Additionally, 29% used emergency savings, and 26% received food stamps to get by.

But now, nearly half of all parents (44%) don't believe their finances will recover within the year, while 14% of parents don't believe their finances will ever recover.

40% of families don't have emergency savings, and 15% say they spent their emergency savings since the beginning of the pandemic. Only 19% of parents expect their emergency savings to last them longer than 1 year – and 41% of families expect their savings to run out within the year.

Americans Who Have Contracted COVID-19 Are More Likely to Struggle Financially

As the national case count of COVID-19 climbs to 78 million, 90% of Americans say they are stressed about pandemic-related issues, and 83% of Americans who have had or currently have COVID-19 say the pandemic has impacted their finances.

Unfortunately, almost one-third of Americans (31%) who currently or previously have have COVID-19 say they're worse off financially than they were last year. More than one-quarter (27%) believe it will take anywhere from 1-5 years for their lives to return to "normal," and 29% say their lives never will.

Because of the financial strain, having COVID-19 can mean taking significant financial risks. Almost one-third of Americans (30%) say they pulled from emergency funds, 27% worked a side gig, and 24% took on additional credit card debt.

Looming financial stress is common for many Americans who have contracted COVID-19. Nearly 2 in 5 (37%) are more stressed about their financial situation than they were last year, 32% are anxious, and 30% are struggling.

But Americans who have contracted coronavirus are also more likely to be stressed. In fact, 93% of Americans who've had COVID-19 are stressed about pandemic-related issues. Those who have had or currently have COVID-19 are:

• 99% more likely to be stressed about living with long-term side effects of COVID-19.
• 56% more likely to be stressed about returning to in-person work.
• 43% more likely to be stressed about their lack of or inadequate health insurance.

👇 JUMP: How does contracting COVID-19 affect homeowners and renters financially?

50% of Americans Currently Living With the Effects of Long COVID Are Also Living Paycheck to Paycheck

Researchers have estimated that long COVID could account for 15% of 10.6 million unfilled jobs in the U.S. And as the long-term impacts of COVID-19 continue to impede Americans' ability to work, many living with post-viral health conditions report significant financial struggles.

Nearly half (46%) of those living with the effects of long COVID say they are "struggling" financially, and 37% say they are financially "insecure." More than one-quarter (26%) of Americans living with long COVID say that it will take 5 years or more to recover financially.

In order to cover expenses, those living with the effects of long COVID say they've done a number of things for the first time to make ends meet.

Those living with long COVID are 2x more likely to take out an additional mortgage on their property and 76% more likely to pull money from non-retirement investments to cover expenses. They're also 48% more likely to pull from their retirement savings to make ends meet and 44% more likely to receive food stamps.

Contracting COVID-19 leaves many in long-term financial hardship. 45% of long COVID respondents also say they are doing worse financially than they were this time last year, while 30% say they have seen no improvement to their finances.

Unsurprisingly, those living with long COVID are also 195% more likely to be concerned about the health implications of long COVID. They're stressed about:

• New variants (45%)
• Contracting COVID-19 again (37%)
• The impact on their mental health (33%)

And while finances are tight, the threat of new variants only exacerbates Americans' financial burdens. Over half (58%) of those living with the effects of long COVID say the Omicron variant has impacted their finances, and 35% of those living with long COVID say they don't believe things will ever return to normal.

75% of Americans Have Non-Mortgage Debt – But Only 22% Believe They Can Pay It off Within a Year

Americans have taken on additional debt to pay their bills since the start of the pandemic, but many report they are struggling to pay down those debts. The number of Americans confident they can pay off their debt within a year has plummeted from 56% last year to just 22%.

We found that almost one-quarter of Americans (22%) accumulated more credit card debt since the beginning of the pandemic. Of those, 24% say it will take them five years or more to pay off their non-mortgage debt.

But paying that debt off may present another financial hurdle. Nearly half of those who accumulated more credit card debt (49%) say their savings will run out within the year, while 46% have nothing saved.

Bleak predictions for debt relief signal increasing stressors for debt-ridden Americans: 65% of those with debt either feel more stressed or have felt no improvement since last year.

Unsurprisingly, one-third of those with debt (33%) say they're concerned about their mental health.

Renters Are More Vulnerable to Financial Hardship Than Homeowners

Across the U.S., rental rates have jumped an unprecedented 17.8% over the past year, leaving renters in a perilous financial position. As inflated prices have resulted in the average worker effectively losing 2.4% of their pay through 2021, many renters have seen their finances nosedive within the year.

Renters are 53% more likely than homeowners to be much worse off financially compared to this time last year. Nearly half of renters (46%) are stressed about their financial situation – compared to just 34% of homeowners.

Unfortunately, renters are also 41% more likely than homeowners to live paycheck to paycheck. Renters are 34% more likely to work a side gig for additional income.

Additionally, 8 in 10 renters (81%) have lived paycheck to paycheck at some point during the pandemic – including 58% who are currently living paycheck to paycheck.

Renters are also far more food insecure than homeowners and are 160% more likely than homeowners to receive food stamps. Over one-third of renters (35%) received food stamps for the first time during the pandemic – nearly triple the share of homeowners (13%).

These numbers ring in much higher than last year, when renters were 92% more likely than homeowners to rely on food stamps.

As a result, it's possible that the comparative security homeowners experience makes them more optimistic than renters.

Homeowners are 32% more likely than renters to feel optimistic about their financial situation, while renters are 33% more likely to feel stressed about their current financial situation.

Meanwhile, renters are 43% more likely than homeowners to say another stimulus payment would help them, and 23% more likely to feel their lives will never return to normal.

Renters and Homeowners Alike Have Struggled to Make Payments During the Pandemic

Housing costs were Americans' greatest monthly expenditure even before the pandemic — but Americans were still not caught up on their mortgage or rent payments as of late 2021. Now, homeowners and renters are stretched even thinner.

Compared to 2021:

• 🏢 Renters are 31% more likely to miss a monthly payment this year.
• 🏠 Homeowners are 16% more likely to miss a monthly payment this year.

Today, over one-third (34%) of renters have missed at least one rent payment, while nearly 3 in 10 homeowners (29%) have missed at least one of their mortgage payments.

But homeowners are still struggling to make ends meet. One-fourth of homeowners (25%) report that, for the first time, they took on additional credit card debt during the pandemic – making them 30% more likely than renters to have done so.

In fact, significant numbers of homeowners believe the following forms of financial relief could help them recover:

• A less inflated cost of living (e.g., bills, rent, groceries, etc.) (46%)
• Another stimulus check (43%)
• Student loan relief (33%)

40% of Potential Homebuyers Are Stalling Their Real Estate Plans in 2022

Nearly half (40%) of respondents who planned to buy a home in 2022 are pushing back their plans. This comes as a surprise after a record-breaking year in 2021, when home prices soared to highs we haven't seen since 2006 as low mortgage rates and limited inventory sparked a home-buying frenzy.

But mortgage rates are climbing again, reaching pre-pandemic peaks, and could contribute to increased homebuyer apprehension as the year stretches on.

Even now, many young homebuyers anticipate maxing out their budgets, and as mortgage rates rise, demand may fall. We found that only 44% of Americans believe now is a good time to buy a home – a 36% decrease from last year.

However, nearly half (48%) of homeowners who plan to sell say they will list in 2022. Last year, 65% of homeowners postponed their plans to list, but now only 21% of 2022 homeowners say they've delayed their plans to sell – a 68% decrease from 2021.

As 40% of potential homebuyers postpone their purchases, we could see increased inventory met with less demand as the year progresses. Hopefully, though, more homes listed in 2022 will encourage trepidatious homebuyers to finally put in an offer on their dream homes.

Methodology

The proprietary data featured in this study comes from an online survey commissioned by Real Estate Witch. 1,000 Americans were surveyed on January 28, 2022. Each respondent answered up to 20 questions related to their financial situation, debt, and worries surrounding COVID-19 and their financial stability.

About Real Estate Witch

You shouldn’t need a crystal ball or magical powers to understand real estate. Since 2016, Real Estate Witch has demystified real estate through in-depth guides, honest company reviews, and data-driven research. In 2020, Real Estate Witch was acquired by Clever Real Estate, a free agent-matching service that has helped consumers save more than $82 million on realtor fees. Real Estate Witch's research has been featured in CNBC, Yahoo! Finance, Chicago Tribune, Black Enterprise, and more.

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