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COVID & Unemployment

Report warns of a worsening affordability crisis for renters

Amy Scott Nov 19, 2020
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Banners against tenant evictions hang from a rent-controlled building in Washington, D.C., in August. Eric Baradat/AFP via Getty Images
COVID & Unemployment

Report warns of a worsening affordability crisis for renters

Amy Scott Nov 19, 2020
Heard on:
Banners against tenant evictions hang from a rent-controlled building in Washington, D.C., in August. Eric Baradat/AFP via Getty Images
HTML EMBED:
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The economic fallout from the pandemic is hitting the lowest-income renters especially hard.

That’s one finding from the new State of the Nation’s Housing report from the Joint Center for Housing Studies at Harvard University.

More than half of renters who earn less than $25,000 a year lost wages between March and September, according the report, compared to 41% of all households. As of late September, around 1 in 5 renters in that income group were behind on their rent. Households of color were more likely to be struggling to make payments.

Chart showing unequal financial impacts of the pandemic on ability to keep up with rent or mortgage payments based on income levels
Chart courtesy of the Harvard Joint Center for Housing Studies, copyright 2020

“While 15% of white renters at that income level are behind, 25% of Black and Hispanic renters are behind,” said Chris Herbert, the center’s managing director. “This reflects the fact that Black and Hispanic workers are more likely to be the sectors of the economy that have had shutdowns from the pandemic and so have lost wages.”

Meanwhile two policies that have helped renters stay in their homes — a national moratorium on evictions from the Centers for Disease Control and Prevention and extended unemployment benefits — are set to expire next month.

Chart showing unequal financial impacts of the pandemic created by loss of employment income based on household income levels
Chart courtesy of the Harvard Joint Center for Housing Studies, copyright 2020

“January could be a very difficult month for millions of renters,” Herbert said.

Even with a federal moratorium, evictions haven’t stopped during the pandemic, said Carol Ott, tenant advocacy director with the Fair Housing Action Center of Maryland. Judges may interpret the rules differently, she said.

“We are seeing people being evicted through the courts,” Ott said. “We’re also seeing illegal evictions where the landlord will go and change the locks on the tenant and not follow the proper procedure.”

While evictions can be devastating for individual families, a wave of filings could also increase costs for homeless shelters, emergency rooms and child welfare services, said Dan Threet, a research analyst with the National Low Income Housing Coalition.

In a new report with the University of Arizona’s Innovation for Justice program, the coalition estimates the public costs to health and social service systems could range from $62 billion to $129 billion.

“Importantly, that doesn’t encompass all of the downstream costs that we are likely to face, if there is a wave of evictions,” Threet said, including lost rental revenue for landlords and damage to the broader economy.

The solution, he said, is direct payments to help both tenants and landlords. The Federal Reserve Bank of Philadelphia has estimated Americans will owe roughly $7.2 billion in unpaid rent by December.

COVID-19 Economy FAQs

What do I need to know about tax season this year?

Glad you asked! We have a whole separate FAQ section on that. Some quick hits: The deadline has been extended from April 15 to May 17 for individuals. Also, millions of people received unemployment benefits in 2020 — up to $10,200 of which will now be tax-free for those with an adjusted gross income of less than $150,000. And, for those who filed before the American Rescue Plan passed, simply put, you do not need to file an amended return at the moment. Find answers to the rest of your questions here.

How long will it be until the economy is back to normal?

It feels like things are getting better, more and more people getting vaccinated, more businesses opening, but we’re not entirely out of the woods. To illustrate: two recent pieces of news from the Centers for Disease Control. Item 1: The CDC is extending its tenant eviction moratorium to June 30. Item 2: The cruise industry didn’t get what it wanted — restrictions on sailing from U.S. ports will stay in place until November. Very different issues with different stakes, but both point to the fact that the CDC thinks we still have a ways to go before the pandemic is over, according to Dr. Philip Landrigan, who used to work at the CDC and now teaches at Boston College.

How are those COVID relief payments affecting consumers?

Payments started going out within days of President Joe Biden signing the American Rescue Plan, and that’s been a big shot in the arm for consumers, said John Leer at Morning Consult, which polls Americans every day. “Consumer confidence is really on a tear. They are growing more confident at a faster rate than they have following the prior two stimulus packages.” Leer said this time around the checks are bigger and they’re getting out faster. Now, rising confidence is likely to spark more consumer spending. But Lisa Rowan at Forbes Advisor said it’s not clear how much or how fast.

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