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Pandemic’s Toll on Housing: Falling Behind, Doubling Up

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As the second year of the pandemic begins, millions of tenants are grappling with lost income and the uncertainty of not knowing how long they will have a home. Their savings are exhausted, they have credit card debt to earn the rent, or they have months overdue payments. Families move in together and settle housing costs by finding others to share them.

The nation has a plague of housing instability that celebrated long before Covid-19, and the economic burden of the pandemic only made it worse. Now the financial scars are deepening and the disruptions to family life are becoming more severe. They leave a legacy that will last long after mass vaccination.

As recently as last year, around 11 million households – one in four US renters – were spending more than half of their pre-tax income on housing, and overcrowding was increasing. It is estimated that there are only 36 affordable rental apartments available for 100 very low-income households.

Now the pandemic is increasing the pressure. A study by the Federal Reserve Bank of Philadelphia found tenants who had lost jobs due to the pandemic had accumulated $ 11 billion in arrears in rent, while a broader measure by Moody’s Analytics, which includes all criminal tenants, estimated that As of January, they owed $ 53 billion in rent back, utilities, and late fees. Other surveys show that families are increasingly pessimistic about earning their rent for the next month and that they will need less groceries and other essentials to pay bills.

On Friday, President Biden underscored the residential real estate uncertainty that millions have faced as monthly employment data provided fresh evidence of a stalled recovery. The rent support in his $ 1.9 trillion relief plan is essential “to keep people in their homes instead of being thrown on the streets.”

The most desperate, wavering over the surface of a missed payment, are already improvising by moving to even more crowded homes, joining friends and relatives, or taking on lodgers.

Such is the case of Angelica Gabriel and Felix Cesario, residents of a two-story apartment complex in Mountain View, California that is largely inhabited by cooks and waitresses as well as maids and workers – the type of workers hardest hit by the pandemic.

Ms. Gabriel, a fast food worker, and her husband, a landscaper, recently moved out of the bedroom they had shared with their two youngest children, 6 and 8. You are now renting the bedroom to a friend of a friend’s while the couple and children sleep on a mattress in the living room. (Two daughters, 14 and 20, continue to share the other bedroom.)

The agreement kept her up to date by raising $ 850 for the monthly rent of $ 2,675.37 Ms. Gabriel handled on the penny.

“We couldn’t pay the rent ourselves,” she said in Spanish. “Suddenly the hours fell. You couldn’t pay, buy food. “

Such changes aren’t directly reflected in rental rates or credit card bills, but various studies show that disturbed and overcrowded households have a number of effects, including poorer long-term health and a decline in educational attainment.

Given the broader economy, the pain is deepest in the US housing market. Surveys of large landowners, whose units tend to be of higher quality and more expensive, have been remarkably resilient to the pandemic. Surveys of small landlords and low-income tenants show that late fees and debts are mounting.

One measure of relief came when Mr Biden extended a federal eviction moratorium, which was due to expire in late January, by two months as states and cities also extended their own eviction moratoriums. In addition, approved rental aid of $ 25 billion is due to be distributed in December.

But for every million households displaced in the United States each year, there are many more millions who move out before missing out on a payment, cut food and medication to make rent, and take up informal housing that does it exists outside of the traditional landlord-tenant relationship.

Updated

Apr 6, 2021, 2:14 p.m. ET

“What happens in the housing court will miss most people in need,” said Davin Reed, an economist with the Federal Reserve Bank of Philadelphia.

While rents have fallen in many major cities, vacancy rates for the cheapest buildings are essentially unchanged from last year, according to CoStar Group, a commercial property group. In other words: Nothing about Covid-19 has changed the fact that there has long been a shortage of affordable housing. So if you lose an affordable home, it will still be difficult to find a new one.

And just as subprime mortgages were a leading indicator of the housing crisis in the mid-2000s, informal tenants – roommates and sub-tenants who don’t have proper leases – are now offering a peek below the surface. These low-income and often undocumented immigrants find these apartments through word of mouth, social media, and Spanish-language news sites where single room apartments (“I rent a room with a bed for $ 400”) are a staple of the classifieds ad.

Kaitlin Heinen, an attorney for the Housing Justice Project in Seattle, said she has seen a significant increase in the number of “unauthorized inmates” in which a landlord tries to evict someone for doing it off the books in recent months has deleted roommate in the device. Claas Ehlers, executive director of Family Promise, a nonprofit homeless prevention organization that has more than 200 subsidiaries in 43 states, said people without a lease account for an overwhelming proportion of the group’s requests for rental assistance and assistance.

“We are seeing this domino effect where cheaper, affordable housing is still saturated, and now we are encountering unauthorized residents,” said Ms. Heinen.

It’s a world of money rent and verbal agreements that are unstable and easy to tear apart – a big reason why various studies show that informal renters are more likely to become homeless.

“People who have places to be evicted are better off than those who don’t,” said Marybeth Shinn, a professor at Vanderbilt University who studies homelessness.

John Wickham found his last spot on Facebook. Mr. Wickham, 60, lives in Decatur, Georgia and worked in customer service for a tree pruning company before losing his job last summer. He collected unemployment insurance but could no longer afford the $ 1,200 a month he was paying to live in a residential hotel. So he resorted to subletting $ 600 with a stranger. His girlfriend found it on Facebook Rentals. Mr Wickham has since defaulted on his share of the rent and is looking for a new place.

“We’re trying to find something on our budget and it doesn’t look easy,” he said.

Renters like Mr. Wickham pose a major challenge to governments trying to prevent evictions and stem the flow of homelessness. Consider what happened last year when a federal deadline approached to spend rental aid that went to states through federal CARES law. Despite the strong demand for help, cities and states struggled to get money to tenants, partly because their criteria were too restrictive.

“Our systems are based on these bourgeois models where everyone has documentation for everything,” said Elizabeth Ananat, economics professor at Barnard College. “Much of the world doesn’t work like that, but most of the people who write laws live in the world that works.”

Cities like Los Angeles and Philadelphia have tried to remedy this by switching to cash assistance programs. California lawyers recently passed a bill extending the state’s eviction moratorium and using up to $ 2.6 billion in federal rent subsidies to pay off rent. Legislation allows tenants to apply for rental assistance by filing documents such as bills and school registrations in lieu of a formal rental agreement, as many other city and state rental assistance programs require.

“The state’s housing crisis wasn’t caused by Covid, and this bill alone certainly won’t solve it,” said Governor Gavin Newsom. “While we need to reaffirm housing affordability, this bill protects in a fair and equitable manner from the worst economic effects of the pandemic.”

In California and elsewhere, aid distribution work is largely reserved for nonprofits. They also filled in the gaps. Take Destination: Home, a San Jose organization that works to end and prevent homelessness. In addition to distributing aid under the CARES Act, the group has raised approximately $ 30 million in private donations that it can make available to a wider segment of the population with less limited spending.

Around 40 percent of the organization’s rental subsidies have been distributed to tenants who do not have a traditional lease, said Jennifer Loving, the executive director.

“People we would never have seen are in trouble now,” she said.

One evening in Mountain View, another non-profit organization, the Reach Potential Movement, distributed bread, cereal, milk and diapers to economically stressed families in the apartment complex where Mrs. Gabriel and Mr. Cesario live.

One of the residents, Hilario Saldívar, a 43-year-old cook and dishwasher, saw his hours cut to four hours a day four days a week and is therefore struggling to afford the $ 2,600 monthly that he pays for the two bedroom apartment he shares with his brother, sister, her husband and child. Mr Saldívar never missed a rental payment, but keeping up to date has come at the expense of his meager savings and even his groceries.

“We’re in a tough battle, a sad battle,” he said in Spanish.

His neighbor Rosa Arellano, a 47-year-old mother of three, cleaned schools and offices before she was laid off last year. She is months behind the $ 1,300 rent for her one bedroom apartment. Ms. Arellano recently signed a document with her landlord stating that California law prohibited her eviction for the time being, but she still owed a balance of $ 3,900, which rose to $ 5,200 with the February rent.

After a year of loss of income, she asked, “Where do we get all the money we owe?”

Liliana Michelena contributed to the coverage.

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