The United States averted the most dire predictions about what the pandemic would do to the housing market. An eviction wave never materialized. The share of people behind on mortgages, after falling steadily for months, recently hit its pre-pandemic level.
But a comprehensive report on housing conditions over the past year makes clear that while one crisis is passing, another is growing much worse.
Like the broader economy, the housing market is split on divergent tracks, according to the annual State of the Nation’s Housing Report released Wednesday by Harvard’s Joint Center for Housing Studies. While one group of households is rushing to buy homes with savings built during the pandemic, another is being locked out of ownership as prices march upward and those who bore the brunt of pandemic job losses remain saddled with debt and in danger of losing their homes.
“Millions of households were financially unscathed coming out of the pandemic,” said Alexander Hermann, senior research analyst at the Joint Center for Housing Studies. “But the pandemic has left millions of others struggling to make their housing payments, especially lower-income households and people of color.”
For the past year, lower-income tenants have relied heavily on government support to pay their monthly bills. These measures have helped about one-third of renters used unemployment or stimulus payments to pay rent at some point during the pandemic but the majority of renters still had to borrow or draw on savings to cover bills, leaving them less able to weather future emergencies, much less save for personal investments or a down payment for a home.
The result is that even with a patchwork of federal, state and local eviction moratoriums, and some $5 trillion in federal relief that included expanded unemployment benefits and tens of billions in housing assistance, roughly 7 million tenants were behind on rent earlier this year. With savings tapped out and unemployment benefits set to lapse, the financial damage to low-income households remains severe enough that they will need more support if they’re to recover with the broader economy, the Harvard report said.
As the US job market recovers and businesses and schools move toward normal operation, political leaders are debating how fast to pull back the emergency supports that helped companies and workers weather the pandemic. That includes the various eviction moratoriums that, despite ample loopholes and patchy enforcement, were instrumental in keeping tenants in their homes.
At the peak last year, the majority of states and several large cities including New York, Los Angeles and Seattle had some sort of heightened eviction protection in place, though the degree of protection varied widely. Many of those safeguards have expired over the past few months, and the federal eviction moratorium issued by the Centers for Disease Control and Prevention in September is set to lapse at the end of the month.
While a big new wave of evictions seems unlikely, the end of the federal freeze has injected uncertainty into tenants’ lives and tilted the balance of power back in the favor of landlords. Tenants’ rights groups have begun pushing the Biden administration for a one- to two-month extension of the freeze to account for widespread delays in the processing and distribution of federal emergency housing aid. The administration is weighing an extension but has signaled it would be contingent on public health considerations, not the housing market.
“We’ve avoided some of the worst outcomes so far, but the crisis is not over,” said Diane Yentel, president of the National Low Income Housing Coalition, an advocacy group that has pushed for increased housing assistance. “If the Biden administration allows the federal eviction moratorium to expire before states and localities can distribute aid to households in need, millions of households would be at immediate risk of housing instability and, in worst case, homelessness.”
On Friday, 22 Democratic state attorneys general urged the Supreme Court to uphold the moratorium. “An unprecedented wave of mass evictions amid the embryonic stages of the post-pandemic recovery would be catastrophic,” they wrote.
The moratorium was never a mandate, and local housing court judges have always had broad latitude. As a result, thousands of tenants who were behind in their rents were evicted during the pandemic despite federal and local freezes, often for violations of terms of their leases not directly related to nonpayment.
The federal freeze was further weakened in several states, including Ohio and Texas, when federal courts struck down all or part of the federal moratorium, which allowed landlords to evict tenants for nonpayment of their rents. That led to higher eviction rates, but ones that fell far short of the most dire predictions.
For all of its shortcomings, the CDC moratorium helped hold off a wave of evictions. And it became a valuable tool after Congress passed more than $40 billion in rental assistance, by buying tenants and their lawyers additional time as they waited for the federal government to review their applications.
“It takes a really long time to process these applications, and a lot of the landlords don’t want to wait six or eight weeks,” said Melissa Dutton, managing director of the Legal Aid Society of Columbus, Ohio, which represents about 2,000 tenants a year in housing court. “So the moratorium gave us a little more time, which gave us a little more leverage.”
Tasha N. Temple, 38, a client of Dutton’s, was able to remain in her two-bedroom apartment after using unemployment assistance to catch up on her overdue rent bill. She called the program, and the moratorium, a “lifesaver.”
Of course, by assisting tenants, the government is also assisting landlords. Neal Verma, president of Nova Asset Management, a Houston landlord with some 6,000 units, said that his tally of unpaid rents $1.4 million just a few months ago had been whittled to about $400,000 thanks to $1 million in government rental assistance. He said he expected to recover even more.
Landlords groups echoed tenant advocates’ frustration with the pace of federal housing aid, and in some cases say they would support a longer moratorium if it meant collecting more rent.
“Getting the funds to landlords has been incredibly slow, and that has impacted those tenants who are truly in need and those landlords who are not getting paid,” said Tom Bannon, president of the California Apartment Association, the state’s biggest trade group for landlords. “We could support a limited short extension, but there has to be a way to get the funds out faster.”
But the moratorium was never much more than a stopgap that has done nothing to address a worsening nationwide housing affordability crisis caused by gentrification, the wealth gap and a chronic shortage of housing for the working class and poor. Even before the pandemic, 1 in 4 rental households was paying more than half its pretax income on rent, while homelessness was on the rise. Since then, more than half of renter households lost income, and 17% were behind on rent earlier this year, according to the Harvard report.
Moreover, while rents got more affordable last year, the pandemic served to highlight the nation’s long-standing shortage of affordable housing. As the economy opens up, renters at the high end of the market are greeting a world of 10% vacancy rates and frenzied competition that has buildings offering as much as five months of free rent.
Tenants in search of a moderate or lower-priced unit will find a vacancy rate that is half as high and essentially unchanged from a year ago. With competition fierce, rents in lower-end units grew at a faster rate in the first three months of this year than they did in the year before the pandemic.
Judge Sergio L. De Leon, a housing court judge in Fort Worth, has seen a steady rise in evictions since the start of the year. As leases that were locked in during the pandemic begin to expire, he said, landlords are now increasing rents.
“It’s sad,” he said.