US Housing Apocalypse: What is Coming and How to Be Prepared

By Thomas Tiedje

Many states’ pandemic-era moratoriums on renter evictions and mortgage payments have expired. In nearly all states, eviction proceedings now can continue or are reaching the end of the hold.

It’s been roughly eight months since the coronavirus outbreak sent shockwaves through the U.S. economy. While the labor market has recovered somewhat and early stock market losses have been reversed, many Americans continue to face deep financial hardship, and the worst may be yet to come.

Experts expect the eviction crisis to get far worse in the coming months. The Covid-19 economic recession has hit renters incredibly hard but is on the verge of an economic depression never before seen in American history.  By May of this year, the number of people unemployed became over 50 million. Although the unemployment has recovered slightly, the struggles for working people have improved little. Most of the jobs lost make up a disproportionate share of service sector jobs, an industry that has been decimated due to the coronavirus shutdowns. As we begin to enter a new phase of lockdowns across the country and the world with the explosion of new cases, we may not see this problem improve but worsen.

Among lower-income adults, 46% say they have had trouble paying their bills since the pandemic started, and roughly 40% say it’s been hard for them to make rent or mortgage payments. About one-in-five or fewer middle-income adults have faced these challenges, and the shares are substantially smaller for those in the upper-income tier. However, that is primarily because most of the government bailouts prevented big businesses and the market from failing but did nothing for low income and working families other than a one time $1200 check that for most went towards rent. Which then went to property owners. Which then went to the banks to give them another billion dollars. 

By October of this year, 32% of households could not make mortgage payments since March and 25% of renters in NYC had not made their payments since March. Even before the pandemic, the US experienced what housing experts deemed an eviction crisis, particularly for lower-income adults. More than 2 million people face eviction each year, far more than the number of people who met foreclosure at the height of the 2008 mortgage crisis. The US has never actually gotten past the subprime mortgage crisis and the Great Recession.

A Pew Research Center survey finds that, overall, one-in-four adults had trouble paying their bills before the coronavirus outbreak started, a one in three have dipped into savings or retirement accounts to make ends meet, and about one-in-six have borrowed money from friends or family or gotten food from a food bank. As was the case earlier this year, these types of experiences continue to be more common among adults with lower incomes, those without a college degree, and Black and Hispanic Americans.

To keep people in their homes, the federal government banned evictions in federally assisted properties through the end of the year, and some cities and states, including Massachusetts, New York, and Michigan, put their own temporary eviction moratoriums in place. But many of those bans begin expiring at the end of the year depending on the state, according to Princeton University’s Eviction Lab, which tracks evictions across the country.

Plus, the extra $600 per week in federal unemployment benefits expired at the end of July. That extra money is “what has been allowing many people who have lost their jobs to continue paying rent,” Solomon Greene, a senior fellow in housing policy at the Urban Institute, tells CNBC Make It. Coupled with the end of eviction moratoriums, the US is likely to experience an uptick in evictions nationwide in the coming weeks.

Evicting people in the middle of a global health crisis puts them at greater risk of contracting and spreading Covid-19, turning “a catastrophe into an apocalypse,” Aaron Carr, founder and executive director of the Housing Rights Initiative, tells CNBC Make It. “Millions of people could be on the streets,” says Carr. “Especially in places like New York City that already have a homeless problem, it could turn into a homeless nightmare.” Greene warns that, “exposure risk is so much more amplified and worsened when you can’t shelter in place because you don’t have a place to shelter.”

Eviction also has long-term — in some cases, multi-generational — financial consequences for individuals and families, Alieza Durana, a writer with the Eviction Lab, tells CNBC Make It. It can ruin a tenant’s credit for many years, making it harder for them to find a new place to live. It also takes a mental and emotional toll on those affected and hits minority communities, particularly women of color and their children, incredibly hard. 

With the possibility of seeing the largest housing crisis in history crash in extremely unforeseen volatile ways, the question becomes what can be done to prevent this apocalypse? The crisis requires a large-scale government response, according to experts. If state and local governments don’t step in to help soon, there will be a “tsunami of evictions and a spike in homelessness” nationwide that will “devastate” not just individuals and their communities, but the economy broadly, Diane Yentel, president and CEO of the National Low Income Housing Coalition, says in a statement to CNBC Make It. A crisis of this magnitude has never been seen before when nearly 60% of renters in states like West Virginia face eviction and homelessness. A governmental response on the level of the Great Depression is needed with bailouts for working people like the UK did in paying 80% of workers’ wages, temporary nationalization of wages, housing and infrastructure projects, and even full debt forgiveness. Ensuring housing stability is a moral imperative and a public health necessity. Looking into long-term policy solutions like UBI may prevent this crisis and other economic issues from destroying the working and middle classes forever. In the coming months and the year ahead Americans and those worldwide need to pay close attention and invest their time and energy into doing anything they can, from giving to those who may be struggling to volunteering at local food banks and charities. They must also push their elected officials to create new economic policies to help those most vulnerable. Only as a united front can Americans hope to prevent a national catastrophe.

The views expressed in this article are the author’s own and may not reflect the opinions of The St Andrews Economist.

Photo by Alex Block on Unsplash

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