Why The U.S. Rental Housing Crisis Is So Dire – Forbes Advisor


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The Supreme Court struck down the Centers for Disease Control and Prevention (CDC) eviction moratorium one year ago, putting millions of renters at risk of losing their homes.

Since then, eviction filings have returned to pre-pandemic levels and, in some places, even exceeded them. Although the job market has mostly rebounded from the early days of the pandemic, inflation and skyrocketing rent prices have pushed many renters deeper into a financial hole.

The labor market is recovering, but around 15% of renters are behind on rent—a persistently high number, says Sophia Wedeen, a research analyst at the Harvard Joint Center for Housing Studies.

In the latest Realtor.com report, the median price for rent across the country jumped by 12.3% in July from July 2021 and was up by 23.2% from July 2020. It stands at an eye-watering $1,879 per month.

While rent is rising, wages aren’t keeping pace. Median weekly earnings for both men and women in the second quarter of 2022 were $1,045 per week, according to the Bureau of Labor Statistics (BLS).

Before taxes, that’s about $4,528 of income per month, which means that households bringing in that amount would pay more than 41% of their income on rent; people that spend more than 30% of their income on rent are considered “cost-burdened,” meaning those households may struggle to afford necessities such as food and transportation.

Affordable rental housing is a multifaceted problem that touches everything from supply to government intervention. Here we look at some of the biggest challenges facing renters.

Evictions Issues Stretch Beyond Tenants Who Fall Behind on Rent

While evictions can appear to be a clear-cut issue—people who don’t pay rent as agreed upon in their lease are removed from the property—the reality is much more complex. Unlawful evictions and landlords who use eviction filings to scare tenants compound an already perilous rental market.

There’s no data on illegal evictions on a national level as the federal government doesn’t track evictions. Instead, the data is largely fractious and limited in historical scope. But there’s evidence that illegal evictions have been going on before, during, and after the pandemic, says Thomas Prettyman, an attorney at New Mexico Legal Aid.

“Illegal evictions are a problem with the system. They certainly happened before the pandemic, and it’s happened after the pandemic,” Prettyman says.

Informal, illegal evictions are instances where the landlord evicts a tenant without going through the proper legal process. Formal legal evictions might occur when judges aren’t familiar with certain laws and erroneously side with the landlord.

Prettyman speculates that the incentive to evict tenants illegally was higher during the CDC moratorium, which prohibited landlords from evicting tenants. This hypothesis has some teeth, as evidenced by a recent survey of 6,000 renters in Philadelphia by Community Legal Services and the Housing Initiative at Penn. The survey shows that illegal evictions “in which landlords lock renters out, threaten them, pay them to move, or otherwise force them to move without a court hearing” increased during the pandemic.

One high-profile example of landlord abuse is a recent case investigated by the Select Subcommittee on the Coronavirus Crisis, which found evidence of rampant abusive eviction practices by four corporate landlords: Pretium, Invitation Homes, Ventron, and The Siegel Group.

Among their illegal tactics was not adhering to the CDC eviction moratorium rules or the federal rental assistance programs. The four companies filed a total of 14,744 eviction actions between March 15, 2020, and July 29, 2021.

“At the same time, these companies each displayed evidence of financial stability: Invitation Homes reported record profits, Pretium invested in significant expansions, Siegel experienced almost no revenue decline, and both Ventron and Siegel each received more than $2 million in forgiven Paycheck Protection Program funds,” the report states.

Prettyman says landlords evict people all the time without just cause, but there aren’t enough pro bono lawyers to help every tenant, and most tenants can’t afford to hire a lawyer.

“An important piece to housing stability is to evaluate rules around evictions,” Prettyman says. “Albuquerque has roughly 11,000 evictions per year, and three judges hear these. Each case is a few minutes, and everybody gets evicted unless they have a lawyer. And very few people have a lawyer.”

Tenants who receive U.S. Department of Housing and Urban Development (HUD) housing choice vouchers and live in HUD-assisted housing are also exposed to unfair and sometimes unlawful landlord practices, according to a National Housing Law Project (NHLP) report, which included responses from 148 legal aid and civil rights lawyers.

One of the most flagrant violations included both public housing authorities and voucher landlords ignoring the federal 30-day notice requirement, to which courts are also turning a blind eye. Some 88% of attorneys reported, “inconsistent or no court enforcement of the requirement.”

Attorneys also reported that landlords increased rents without public housing authority approval leading to some evictions; landlords are required to give a 60- or 90-day notice of rent increase to the tenant before raising rent, per HUD rules. Attorneys also claimed landlords wouldn’t work with emergency rental assistance programs—even when tenants documented pandemic-related hardship.

“No one should be evicted from HUD-assisted housing for not being able to pay rent,” said Marie Claire Tran-Leung, evictions initiative project director at the NHLP, in a statement. “Evictions should be the last resort, especially at a time when skyrocketing rents and inflation have dramatically reduced the overall availability of affordable housing.”

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New Leases Cost Renters Almost Twice As Much As Renewals

Renters who want to move also face a steep rise in rent prices, according to Realtor.com. New leases are an additional $300 or more per month compared to $160 per month for renewing an existing lease.

Prohibitively expensive rent hikes can trap renters in inadequate apartments or force them to forgo being closer to work or school because it’s too expensive to relocate.

“Many renters are finding themselves in a financially precarious situation. Their lease has reached that month-to-month status, but landlords are renewing these leases at much higher rates,” says George Ratiu, senior economist and manager of economic research at Realtor.com.

Hal Martin, a policy economist for the program on economic inclusion at the Federal Reserve Bank of Cleveland, analyzed eviction data before and after the pandemic. One of the most salient results from the analysis was the correlation between the rise in evictions and the rise in rent prices. In cities where there was a 1% rent increase over the previous three months, there was a 2% increase in the eviction rate.

“There’s a clear acceleration in evictions in places with higher rent growth,” Martin says. “It could be that if you have a tenant struggling to pay rent, the payoff to evict increases if you can raise the rent for the next tenant.”

While landlords have every right to maximize their rent potential, especially as they face inflation-related pressures themselves, the problem remains that renters have few options as the affordable housing supply is scant. Landlords, to some extent, have shouldered the burden of the state to provide housing for financially vulnerable renters.

The rental vacancy rate is hovering around 5.6%, the lowest since the mid-1980s, creating an imbalance of supply and demand that’s fueling runaway rent increases. A study by RentCafe showed that, in June, there were an average of 14 renters competing for one apartment.

The Reasons For The Rental Housing Crisis Hinges On These Three Factors

While wrongful evictions certainly contribute to housing insecurity and homelessness; the real culprits are a trifecta of an undersupply of affordable housing, low wages, and a persistent lack of federal and state assistance to meet the need—particularly as double-digit rent price growth and inflation cleave at already-low wages.

The National Low Income Housing Coalition (NLIHC) reports that no states have an adequate supply of housing for low-income individuals, an alarming fact, especially in light of the uptick in the unsheltered population, which has jumped by 30% since 2015.

For renters whose income is at or below the poverty level or 30% of the median income in their metro area, there’s a shortage of affordable rental homes to the tune of 7 million.

And while new multifamily construction is gaining momentum, most new construction is geared toward middle- and high-income households, Ratiu says. The added supply will eventually help lower-income folks, but the trickle-down effect can take some time.

The NLIHC estimates that people need to earn $24.90 per hour to afford a rental home at HUD’s fair market rent without spending more than 30% of their income, which is considered a general guideline for a healthy personal budget.

Nearly one-third (31.9%) of the American workforce earns less than $15 per hour. These 52 million workers are in a harrowing position of barely having enough income to cover rent, transportation to work, and food and utility costs. This is where federal assistance programs play an essential role.

One of the most popular and helpful programs is HUD’s Housing Choice Voucher Program, which gives eligible families a voucher to use toward rent in any rental housing that accepts them. About 5.2 million people receive vouchers yearly, a woefully inadequate amount for the number of people who qualify for the program. And many families wait years to get a housing voucher. To qualify, you must have an “extremely low income,” which is income up to the poverty line or not to exceed 30% of the local median income, whichever is higher.

What Lawmakers Are Doing About the Rental Crisis

There’s no silver bullet that can solve the affordable housing problem. The complexity of housing supply, access to federal assistance, the enforcement of fair rental practices and low wages require the cooperation and coordination of public and private entities.

Lawmakers across the country are looking for ways to expand access to affordable housing.

Here are some current housing initiatives:

The Stability Voucher Program

HUD announced a new program on August 16 called the Stability Voucher Program, which includes $43 million in housing assistance for low-income and vulnerable individuals. This includes those who are at the highest risk of homelessness, as well as people who are experiencing or are fleeing from domestic violence, dating violence, sexual assault, stalking, or human trafficking.

The Stability Voucher program is a targeted attempt to work with public housing agencies (PHA) that are actively trying to help people with high risks of homelessness, which is why to qualify for these dollars, the PHAs must “partner with eligible Continuums of Care (CoCs) or other entities serving the targeted population.”

Redistribution of State Stimulus Funds

On July 28, the U.S. Treasury Department issued guidance that would allow more of the $350 billion in the American Rescue Plan (ARP) under the State and Local Fiscal Recovery Funds (SLFRF) toward “the development, repair, and operation of affordable housing units.”

Expanding the Eviction Protection Grant Program

HUD is issuing $20 million in new grants for the Eviction Protection Grant Program, twice the amount initially earmarked in November 2021. This program helps legal providers offer free legal counsel to low-income households facing eviction.



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