The worst of the economic impact of COVID-19 may be yet to come. With tens of millions jobless, unemployment benefits ended, and no second stimulus signed, many Americans are struggling with an untenable situation.
Without any government relief or the ability to return to work, many people will be unable to pay rent. As time drags on without resolution, as many as 40 million Americans may be evicted from their homes next month. According to the National Low Income Housing Coalition, “the United States may be facing the most severe housing crisis in its history.”
So, how did we get here? And where do we go next? How is it possible that in the wealthiest nation on Earth, more than one-third of all renters are on the edge of eviction? And can anything be done to stop this crisis?
The Build Up Of a Crisis
While the coronavirus pandemic is the leading driver behind the potential eviction crisis, the seeds have been sown for the last decade. According to The Eviction Lab at Princeton University, the cause-and-effect relationship between poverty and eviction is not so clear cut. Often eviction is a cause of poverty, not vice versa.
From 2000 to 2016, roughly 3.6 million evictions were filed annually. However, many renters who face eviction owe less than $600 or have only missed one or two months of payments. Under normal circumstances, many tenants facing eviction aren’t deeply in debt or poverty, yet still face homelessness.
Entering the coronavirus pandemic, nearly half of all renters spent a third of their income on rent, and 25 percent spent half their income on housing. The lack of federal spending on low-income housing, as well as the precedent of evictions over relatively small debts, left these “rent-burdened” tenants particularly vulnerable should a crisis strike. Of course, one did.
Moreover, unemployment in the wake of COVID-19 impacted lower-income Americans more than middle or high-income workers. More than half of low-income households lost all or some of their income, according to Pew. All of these factors combine to set the stage for one of, if not the worst housing crises in American history.
CARES Act Protections
The CARES Act, the $2.2 trillion coronavirus relief bill passed in March, included critical support for renters. The bill featured a 120-day eviction moratorium for renters receiving federal assistance or living in a federally-backed property. However, that expired on July 24th, and landlords are free to start giving out eviction notices. Another federal eviction moratorium protecting renters in homes with mortgages backed by Fannie Mae and Freddie Mac expires August 31st.
Also, federal unemployment benefits of $600 weekly were critical for out-of-work tenants to cover rent. Those benefits too expired at the end of July, and no effective replacement has been established. While the government did manage to hold off an eviction crisis through the first four months of the pandemic, it appears the issue was only kicked down the line.
What Comes Next?
President Donald J. Trump signed a series of executive orders in early August to provide direct relief to Americans. One order sought to assist renters and landlords. However, this order is vague, unspecific, and did not extend the eviction moratorium.
Instead, Trump directed the Department of Health and Human Services and the Center for Disease Control to consider whether a further halt on evictions is necessary. In addition, the president ordered that Secretary Steven Mnuchin and Housing and Urban Development Secretary Ben Carson should find any federal funds that can be used to aid renters and homeowners.
All this, experts and critics say, amounts to nearly nothing. The order provides no relief money to struggling tenants, nor does it pause evictions. Anyone vulnerable when the CARES Act protections ended remains vulnerable.
Certain states have taken more direct action. For example, one week after New York’s eviction pause ended, a judge ruled that no evictions can be carried out until October. However, without a federal solution, millions are saddled with uncertainty and fear.
The Bottom Line
Evidence and expert forecasts predict that a historic eviction crisis is on the horizon. Even if a fraction of the 40 million at-risk renters are evicted in the coming weeks, the impact on the economy and country would be devastating. There is still time to stop the bleeding and prevent a major crisis, but that time is running out. If some meaningful federal action isn’t taken soon, the present disaster may seriously worsen.