Report Highlights Need for Comprehensive, Well-Funded National Housing Policy
After a cooldown early in the pandemic, rental housing demand has come back aggressively in the second year, reducing vacancy rates and driving up rents. So says Harvard’s Joint Center for Housing Studies (JCHS) recently released annual “America’s Rental Housing 2022” report. The new report finds that rents in 77 of 150 markets analyzed increased by double digits in the third quarter of 2021, compared to a year earlier. And the vacancy rate for all rental units was at only 5.8 percent in the third quarter of 2021. This vacancy rate was the lowest observed since the mid-1980s.
The report highlighted how lower-income renter households were already in a housing crisis before the pandemic. One million rental units affordable to households with incomes at or below $30,000 were lost between 2018 and 2019. By 2019, lower-income renters accounted for 62 percent of all renter households paying more than 30 percent of their income on rent and 86 percent of renter households paying more than 50 percent.
The housing impacts of the pandemic continued into 2021. The report finds that some 15 percent of renter households were in arrears in the third quarter of 2021. At the same time, nearly a quarter of renter households reported that they had lost employment income in the previous four weeks. Lower-income renters were especially hard hit by income losses and likely to fall behind on rent. Fully 23 percent of households with incomes below $25,000, along with 15 percent of those with incomes between $25,000 and $50,000, were behind on their payments in the third quarter of 2021. By comparison, just 5 percent of households making more than $75,000 owed back rent.
The report notes the importance of federal interventions such as the CARES Act and Centers for Disease Control and Prevention (CDC) eviction moratoriums, unemployment insurance, economic impact payments, and emergency rental assistance in reducing the worst housing outcomes during the pandemic.
The report shows that eviction filings dropped by 40 percent at the beginning of the pandemic and remained 40 percent below average in November 2021. Eviction filings increased after the CDC moratorium ended, but not by as much as expected. And the report attributes this to a combination of emergency rental assistance, income supports, and landlord flexibility.
Aging Stock Reinvestments
The report finds much more reinvestment is essential to preserve the aging rental stock, particularly units at risk of loss to either weather-related events or disrepair. As it is, some 17.6 million occupied rentals—40 percent of the nation’s supply—are located in areas with at least moderate risk of annual losses from natural hazards. More than a fifth (4 million) of the units under threat have rents under $600. Much of the subsidized stock is also located in high-risk areas, including 700,000 project-based HUD units, and 200,000 USDA multifamily units.
Housing Safety Net Reinforcement
The report highlights how HUD assistance substantially reduces the incidence of cost burdens among recipients. Supply-side measures include public housing and project-based Section 8 units. It notes that public housing provides 958,000 units that primarily serve renters with incomes below 50 percent of the area median. And since 2012, the Rental Assistance Demonstration (RAD) program has addressed some of public housing’s financing needs by allowing owners to convert to longer-term, more stable Section 8 contracts. These conversions have boosted the project-based Section 8 stock to 1.3 million units.
During a Jan. 21 panel on the report coordinated by the Joint Center, HUD Special Advisor on Rental Assistance Peggy Bailey said that any sole reliance on the private market to address the nation’s affordable housing needs is misplaced. “It is extraordinarily important to have public policies and resources to support rental housing,” Bailey stated as she pointed to the Build Back Better Act’s resources to expand, preserve, and improve affordable rental housing.