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COVID-19 Worsens Longstanding Rental Affordability Challenges According to New Harvard Report

Published on November 20, 2020 by John McMullen
COVID-19 Worsens Longstanding Rental Affordability Challenges According to New Harvard Report

On November 19, Harvard University’s Joint Center for Housing Studies (JCHS) released its 2020 State of the Nation’s Housing report. The report finds that, despite low interest rates and continued growth in some sectors, the health and economic consequences of COVID-19 coupled with racial tensions and climate change across the nation have exacerbated the rental supply and affordability crises.

According to JCHS, as of late September, renters earning less than $25,000 a year were much more likely to file for unemployment income benefits since the March shutdown. While state and federal moratoriums have significantly slowed eviction processing, the report notes that, without additional federal relief, many renters who have missed payments may be unable to pay back rent and could find themselves at risk of eviction and homelessness.

The Number of Cost-Burdened Households Continues to Rise

With rent increases continuing to compete with income gains, some 20.4 million renter households paid more than 30 percent of their incomes for housing in 2019. The JCHS report found more than four-fifths of households with incomes under $25,000 were at least moderately cost burdened in 2019, including 62 percent paying more than half their incomes for housing.

According to the Household Pulse Survey from late September, 28 percent of renters used their federal stimulus checks to cover basic needs, including rent, and 17 percent used unemployment insurance benefits. However, many households also had to turn to alternative financial supports. The report indicates nearly a quarter of renters borrowed money from friends or family to cover costs, and 27 percent relied on savings. Since nearly half of renter households have savings of less than $1,000 and their rents typically exceed that amount, many have likely depleted their emergency funds. JCHS highlights in its report the NCSHA-commissioned STOUT analysis of current and expected rental shortfall and potential eviction filings in the U.S., which projects a cumulative rent shortfall of at least $25 billion by January 2021.

Disparities Among Homeowners Deepening

According to the JCHS report, households of color and those with lower incomes have seen significant decreases in their incomes because of COVID-19. For many of these homeowners, the income losses come on top of cost burdens, leaving them struggling to pay their mortgages. Among homeowners earning less than $25,000 annually, the report found 69 percent were cost-burdened going into the pandemic. In addition, homeowners of color at this income level were also 5 to 10 percentage points more likely to have cost burdens than white homeowners.

As shown in the figure below, just seven percent of white homeowners were behind on mortgage payments in late September, but the share was nearly two-and-a-half times higher among Hispanic (18 percent) and Black (17 percent) owners, and nearly twice as high among Asian owners (12 percent).

Homelessness Is Again on the Rise

Before the onset of the health crisis, the affordable housing crisis was fueling an increase in homelessness. JCHS highlights HUD’s latest point-in-time estimates that show an increase of 15,000 more people experiencing homelessness last year compared to the previous year, totaling nearly 568,000. The report attributes the significant increase in the number of people experiencing homelessness to growth in the unsheltered population, whose numbers rose by almost 17,000 to 211,000. Moreover, homelessness rose in both high- and low-cost states across the country in 2019, with increases of more than 10 percent in six states.

While some of HUD’s major programs saw an increase in funding from FY 2010 to FY 2020, other programs saw significant decreases, including the public housing operating fund (down 19 percent), the HOME Investment Partnerships Program (down 37 percent), and the Community Development Block Grant program (down 34 percent). While some funding for new homes under the Section 202 Housing for the Elderly program was restored in 2018, its budget in FY 2020 was still 18 percent lower than in 2010. Funding for Housing for Persons with Disabilities was also reduced by 43 percent over the last decade.

A Call to Action

JCHS concludes more must be done to address the large number of individuals and families who are not able to secure affordable housing as rent increases and home prices continue to outstrip income growth. According to the report, this year’s traumatic events have delivered a wake-up call that access to affordable housing is an essential right, not only for the disadvantaged but also for the ability of entire communities to prosper. JCHS urges policymakers to seize the moment by framing a new, comprehensive housing strategy that will reduce inequalities and advance the longstanding goal of a decent, affordable home in a suitable living environment for all.