Policy experts say that between 30 million and 40 million Americans or 29 percent to 43 percent of renter households could face eviction with the expiration of COVID-19 protection and aid packages. A severe housing crisis is, therefore, looming.
But is the pandemic to blame?
The current health crisis has had significant effects in one way or the other on American households. The pandemic has seen millions of renters fail to make their rent payments.
Consequently, Moms and Pops who depend on rental income to pay their mortgage on these properties have fallen behind on these payments.
As if that weren’t bad enough, families have, at one point, had to choose between paying rent and buying groceries.
In a way, these ramifications might make it seem that the pandemic might be responsible for the crisis. The Aspen report released last year suggests that that might not be the case.
According to the report, about 50 percent of renter households in the US were already “cost burdened” or were “severely cost burdened” even before the pandemic hit. A good majority of these are people of color, as they make up a large percentage of low-income earners.
An astonishing 18 million Americans had half their income go towards housing; 1 in 7 American households.
Of this, renting households, before the pandemic, had 30 percent to 50 percent of their income go toward rent. It is therefore very naïve to blame the pandemic for the current housing crisis. COVID 19 only acerbated an already festering housing crisis.
The current housing crisis has affected renters and mortgage payers alike.
Rent prices have been on the rise over the years. In fact, rent has gone up by 37% since 2000. And despite debt being more affordable, home affordability is still out of reach due to the historically low interest rates.
Housing prices have unfortunately not been growing inversely with wage growth. With housing being that expensive, families are barely scraping by – three fourths of Americans are struggling to afford basic needs, such as food.
People of color have been among those hit hard in both crises, having most of them express low confidence in making rent compared to white renters.
As so, people of color have higher rates of poverty than their white counterparts. In 2019, according to the census, 34 million Americans lived in poverty – Blacks and Latino Americans make up the greater majority.
Years of discriminatory racial housing policies have meant that minorities have difficulty accessing housing, especially in the rental housing market. That and the fact that many households lost their jobs, it goes without saying that as moratoriums expire, neighborhoods with people of color will face more evictions.
On top of wage and housing cost disparity, the housing supply has been on the decline. Towards the end of 2020, Freddie Mac calculated that there was a shortage of 3.8 million housing units.
With the annual 1.5 million housing units’ construction, the demand has by far outweighed the supply. Active listings might have increased in some states, but their number cannot sate the current demand.
The current demand and supply dynamics have seen price appreciation go up by double digits. Median listing prices grew by 18.3 percent over last year, and even with prices increasing exponentially, people are engaging in bid wars and paying well over the median list price.
The market is therefore seeing a large number of would-be homeowners being out-priced. They will likely remain renters into the foreseeable future. Worse still, is if they are unable to make rent, they may face homelessness.
The housing crisis, though we may ignore it, is impacting every one of us. The impacts may be direct, such as a home loss, or indirect, with the extreme rise of home prices or rent.
Whichever way it impacts you, it is time that we put the leaders we elected to use to prevent this crisis from getting out of hand. The government must look into expanding the current housing supply and, while at it, make it affordable.
In addition to this, there should be provisions that facilitate rental assistance to families in crisis. In bridging the gap between incomes and housing costs, states should provide rental assistance. Finally, they must look into renter protections, and it must be enforced.