COVID-19 and the impending housing and eviction crisis

Housing inequality has been a prevailing issue since long before the coronavirus pandemic: groups including families with children, people with disabilities, same-sex couples, and transgender individuals have long been victims of housing discrimination. Landlords and rental agents have employed tactics such as showing certain individuals fewer listings, or only showing them options in certain neighborhoods, leaving those individuals with restricted housing options. Programs designed to help mitigate the harmful effects of these practices, such as housing vouchers, have failed to eradicate housing inequality because landlords will often discriminate against those who have access to these aid programs.

Studies dating as far back as 1989 have found high levels of discrimination against Black and Latino home-seekers. Since 2004, aspiring Black and Latino homeowners have had the highest mortgage denial rates when compared to other racial groups. A study conducted in November 2019 found that Black and Latino homeowners were charged higher interest rates than white homeowners. Additionally, the study showed that lenders rejected 1.3 million creditworthy Black and Latino applicants between 2008 and 2015. These structural and systemic forms of discrimination have created barriers to homeownership for people of color.

Overall, homeownership levels in the country fell dramatically during the Great Recession and have since been slow to increase. For people of color and low-income families, it has become especially difficult to catch up.

The coronavirus pandemic has forced over 31 million Americans into unemployment, which pushed Congress to expand unemployment insurance benefits through July 31. The House and Senate were unable to agree on a package to extend those benefits before they left town for their summer recess. Amid the stalled congressional negotiations, President Trump signed an executive order extending unemployment aid by $400 a week, with $100 covered by the states, through December 6. However, it is unclear when these benefits will begin and whether all states will be able to pay their share.

While stimulus payments and additional unemployment insurance helped many pay for mortgages and rent, that assistance was not enough for Black and Latino families who typically already hold less wealth than white families. In April, more than 45 percent of Black and Latino families reported material hardship, and over 51 percent of Black adults and 59 percent of Latino adults are increasing their credit card debt to weather the current crisis.

Similarly, the U.S. Census Bureau’s Household Pulse survey from July 16-21 indicated that white homeowners were significantly more likely to pay their mortgages in May than other racial groups. Black and Latino homeowners were more likely to not have paid their mortgage or had those payments deferred. Additionally, white homeowners were more likely to have high confidence in their ability to pay their mortgages next month than homeowners in other racial groups.

Some of the provisions in the CARES Act, the $2 trillion aid package passed this spring aimed to give homeowners relief, but the effect of these measures has been limited. As of May 17, the share of mortgage loans in forbearance increased to 8.36 percent, meaning that 4.2 million homeowners are now in forbearance plans.

In analyzing how the pandemic has affected households, the disparities are as stark for renters as they have been for homeowners. In 2019, the Joint Center for Housing Studies at Harvard University found that rental costs increased by 3.6 percent nationwide in 2018. They also found that more than 37 million households are considered to be “cost-burdened.” Upwards of 18 million of those are “severely burdened.” Overall, more than 40 million households across the country spend at least 30 percent of their household income on rental costs alone.

In a survey conducted between March 25 and April 10, Black and Latino renters were more than twice as likely than white renters to report being unable to pay their full rent during the pandemic. The survey found that Black and Latino renters also have less confidence in their ability to afford future rental payments. Additionally, the survey recorded that over 19 million renters relied on the stimulus payment to pay their rent in May.
One of the many risks of failing to make housing payments is that renters and homeowners could find themselves facing evictions or foreclosures. The CARES Act established a federal eviction moratorium that prevented tenants from facing eviction during the pandemic. However, it only covered tenants living in properties financed with federal mortgages and properties participating in the Low-Income Housing Tax Credit. Approximately one in four renter households are covered by the federal eviction moratorium, leaving a large number of households without protections.

Aside from a lack of wider protections, only 15 states require landlords to verify if their properties were covered by the moratorium. If landlords failed to verify whether they are covered, it became up to the courts and tenants to find out and enforce the law themselves. This caused confusion among tenants, landlords, and judges, which in turn led to an uneven enforcement of the moratorium. The federal mandate lapsed at the end of July, leaving millions of Americans at risk. President Trump signed an executive order instructing officials to “minimize, to the greatest extent possible, residential evictions and foreclosures,” but does not include decisive actions.

In some states, the wave of evictions has already begun. In Wisconsin, the governor’s eviction ban expired on May 27, and by the first two weeks of June, eviction filings increased by 42 percent over 2019 levels. This accounts for over 1,000 eviction filings over the course of two weeks. Additionally, landlords in at least four states violated the federal moratorium by filing for evictions against tenants.

Congress is trying to give renters and homeowners some relief. At the end of June, the House passed the Emergency Housing Protections and Relief Act of 2020, which aims to establish a $100 billion rental assistance program based on the Emergency Solutions Grant program. House Democrats adopted the proposal and included it in the HEROES Act, which also included an expansion on the federal eviction and foreclosure moratorium. The HEROES Act passed the House in mid-May but has stalled in the Senate. Therefore, there is currently no immediate or future relief for the millions of Americans who are at risk of facing evictions or foreclosures in the height of the coronavirus pandemic.

To learn more about the state of housing during the coronavirus pandemic, download our deck on housing inequality.

UPDATE | September 1, 2020 at 4:17PM EDT: Senior Administration officials will hold a background briefing via conference call at 5:00PM EDT on the temporary halt in residential evictions to assist those impacted by COVID-19.