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Wednesday, April 22, 2020
Renters and Rental Market Crisis
Working Group
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The COVID crisis has a waterfall of effects . . .
W a t e r f a l l
Capital Markets tighten credit and lenders can't or won't lend
Property Owners/Landlords can't cover operating costs & pay lenders, city services and taxes
Tenants lose income & can't pay rent
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The solution begins with . . .
Stabilizing renters, which will . . .
Stabilize and preserve properties and
landlords, which will . . .
Enable lenders to finance rental housing
and prevent larger capital market failures
W a t e r f a l l
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COVID-19 creates problems for the rental market across three time horizons
Immediate
• April -September 2020
Intermediate
• September 2020 -September 2021
Long-Term
• After September 2021
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Even before COVID-19, low-income households faced immense rent burdens
Source: ACS 2018 Note: Rent Burden - Gross Rent/Income is between 30% and 50%,
Severely Rent Burden – Gross Rent/Income is 50% or above
1,312,246
3,046,709
3,733,538
1,025,114694,751
123,821
6,124,663
2,585,362
827,344100,633 47,830 781
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
AMI<30% AMI: 30-50% AMI: 50-80% AMI: 80-100% AMI: 100-150% AMI≥150%
NUMBER OF RENT BURDENED HOUSEHOLDS
Rent Burden Severely Rent Burden
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5 million already cost-burdened households under 80% AMI work in the 5 most vulnerable industries to COVID-19
Note: Five industries include (1) Food & Accommodation, (2)
Construction, (3) Retail, (4) Entertainment and (5) Other Services.
237,500
955,854
1,149,062
297,822
171,612
25,220
1,649,891
792,609
235,876
22,083 8,699100
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
AMI<30% AMI: 30-50% AMI: 50-80% AMI: 80-100% AMI: 100-150% AMI≥150%
Rent Burdened Severely Rent Burdened
Source: ACS 2018
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These same 5 industries have already shed an estimated 4.1 million low-income jobs
Note: Five industries include (1) Food &
Accommodation, (2) Construction, (3) Retail, (4)
Entertainment and (5) Other Services.
Source: Where Low-Income Jobs Are
Being Lost to COVID-19, Urban Institute
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Renters: Individuals who were previously housing insecure and for whom
CARES Act UI payments don’t replace income that could be used for rent
are at risk.
Owner/Landlords: Owners for whom mortgage forbearance does not apply,
face potential financial insolvency as tenants are unable to make full or
partial rent payments.
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Over the next several months the immediate challenges are . . .
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These problems will likely persist into 2021
• Renters: Notwithstanding federal stimulus income supports, low and
moderate income renters that have lost income and face unsustainable
financial burdens, may become housing instable in the intermediate term.
• Owner/landlords: Owners that can draw on operating reserves and qualify
under forbearance policies could face financial insolvency.
• Capital markets: Multifamily servicers will continue to need assistance to
meet financial obligations.
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Depending on the longevity of the crisis, this could create long-term problems in the rental market
Renters: Without appropriate policy interventions, long-term
unemployment coupled with reductions in the affordable housing stock
could lead to increases in homelessness and housing instability.
Owner/landlords: With the loss of mom and pop owners, larger
commercial companies may buy smaller rental properties. Commercial
owners may not keep rents affordable.
Capital markets: If capital markets take a hit, and lending standards
tighten, funding for the development and rehabilitation of rental housing
declines, leading to an even tighter housing market and more long-term
housing instable families (could be even worse with losses of existing
affordable housing).
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A portfolio approach is needed
• There may be relief that is not possible to provide directly to
tenants and for which an intervention through owners is
needed to supplement
• Each delivery mechanism has limitations; several
mechanisms will cover more renters in need
• In addition to allocating resources, tenant protections are also
needed
• Problems in the rental market will shift over time and new
policy interventions may be needed at different points
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Today we will discuss policy proposals to address the immediate challenges . . .
Will Fischer, Center on Budget and Policy Priorities
Tom Bledsoe, Housing Partnership Network
Shekar Narasimhan, Beekman Advisors
Ben Metcalf and David Garcia, Terner Center at UC
Berkeley
A g e n d a
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Discussion
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Discussion questions
Which tenants affected by the COVID crisis do these proposed solutions
serve?
Which tenants are not covered by these solutions?
What data analysis is needed to:
Estimate the size of the challenge
Assess how well proposals address the challenge
Size the proposals
Help to target resources to those most affected by the COVID crisis
I m m e d i a t e C h a l l e n g e
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Future working group meetings will cover . . .
Intermediate challenges
Long-term challenges
Federal role for tenant protections
A g e n d a