Cares Act, Eviction Moratoriums End, Putting Affordable Housing at Risk

Affordable Housing Crisis news

Stockton, CA Affordable Housing Advocate, Matthew Davies, Proposes Solutions

 
The affordable housing industry is facing a crisis. Federal unemployment payments established under the CARES act have expired. President Trump’s recent memorandum extended federal unemployment benefits through December 27, but reduced payments by one-third. U.S. Census data revealed 27 percent of Americans were unable to pay their rent or mortgage in July and 34% of renters were uncertain they could pay August’s rent.

Furthermore, eviction moratoriums put in place following the COVID-19 pandemic have also expired in many parts of the country. Trump’s recent executive order directs Health and Human Services and the Centers for Disease Control to evaluate the necessity of eviction moratoriums but doesn’t extend them at the federal level, which means that those unable to pay their rent may soon be fighting in court to keep their homes.

While some state and local governments are working to protect renters by extending their eviction moratoriums, the affordable housing industry faces another threat: a diminished supply of affordable homes, as owners of these properties – with inadequate rental income and no moratorium for paying their bills – may be forced to close their businesses. If that happens, our country will experience an even greater shortage of affordable homes, at a time when they are needed most.

How can we protect renters and ensure the viability of the affordable housing industry that they rely upon? This article offers several solutions, as well as a closer look at why the affordable housing market is at greater risk than its market-rate counterparts.




The Challenges Facing the Affordable Housing Industry

 
Owners and operators of affordable housing face several unique challenges compared to owners of market-rate and upper-end housing. In addition to operating on thinner margins than market-rate apartments, within the affordable housing industry, a significant proportion of residents work in the “informal economy” and therefore are ineligible for unemployment benefits, including the expanded benefits offered under the CARES Act. For these residents, eviction moratoriums help them keep their homes while they struggle to stay afloat.

The problem is that in some areas, including on the West Coast, eviction moratorium ordinances have been overly broad, allowing people to stop paying rent regardless of whether they or their job or their health was impacted by COVIID-19. Housing providers bear the brunt of the impact, sacrificing a large portion of their rental income. Meanwhile, affording their own mortgages and utilities becomes increasingly difficult.

The U.S. has a shortage of low-income housing – a shortage of more than 7 million affordablehomes and apartments, according to the National Low Income Housing Coalition (NLIHC). With the number of unemployed rising as a result of the COVID-19 pandemic, the demand foraffordable homes will be greater than ever.

A second coronavirus stimulus package to aid citizens, if passed, will only delay the inevitable, is economically unsustainable for our country, and doesn’t address the root of the problem in our industry: too few affordable homes to meet the current and projected need.




Three Ways to Help Owners and Operators of Affordable Housing Stay in Business

 
Several solutions exist for owners, operators, and managers of affordable housing to remain operational and boost the development of more affordable homes.

  • Landlords should be willing to re-negotiate payment plans with their tenants on a case-
    by-case basis. For tenants who need it, help can be offered in the form of government
    rental assistance, temporary rent subsidies provided by the property owner, or an
    individualized rent payback plan that is outlined in writing.
  • Private and government lenders should grant zero interest bridge loans until such time
    that tenants can go back to work and eviction moratoriums are lifted. This would help
    take some of the burden off the shoulders of property owners, who have seen their
    rental income cease.
  • To make homes more affordable, we must increase the number of homes available and
    build those affordable homes closer to population centers. This requires more
    permissive zoning, less red tape, and creative use of the available land to accommodate
    more families in less space, including tiny home communities – which can accommodate
    25-30 residencies per acre – and high-rise apartment buildings – which provide for about
    300 people per acre, on average.

To protect our industry and safeguard low-income housing during our current economic climate requires a multi-faceted solution. By employing creative and innovative solutions to increase the affordable housing supply and share the financial burden, we stand a chance.

About the Author

 
Matthew Davies is the founder of Stockton, CA-based Harmony Communities, which currently owns and operates thirty-three manufactured housing communities in the western United States. An investor and community development professional working for affordable housingsolutions, Davies’ goal is to help bring the opportunity for homeownership to people in his home state who otherwise could not afford to buy a home.

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