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The Round-Up Volume 20: The State of Housing in America

As we reflect on the many challenges people confronted this year, we’ve never been more driven to deliver on our mission of turning every renter into an owner.

December 3, 2020

America’s housing system is broken. There is no more beating around the bush.

We’ll look back on 2020 as the year when a global pandemic brought a lot of challenges to the fore, and housing happens to be one of the greatest challenges we face as a nation.

As we enter the final month of 2020, we’re taking the time to reflect on how we might reshape the world going forward. 🌎

Feature Story

Pandemic, Racial Injustice, Climate Change

Did you ever think you’d see those three topics tied to housing? Well, the sooner we recognize their deep connection with our housing system, the sooner we can take steps toward a better future.

While structural economic and social issues can fester beneath the surface, they really come to light in times of crisis. Despite the pandemic-led recession, home prices have soared. Rents are out of whack with incomes. Inequities have deepened.

The COVID-19 pandemic, racial injustice, and climate change are not only exposing America’s housing woes but also exacerbating them, according to the new State of the Nation’s Housing report from Harvard’s Joint Center for Housing Studies.

Here’s what stands out:

  • Before the pandemic, 37.1 million households (30%) were cost burdened, meaning they spent over 30% of their incomes on housing. It’s likely worsened due to the economic impacts of Covid-19.

  • The homeownership rate for white households rose to 73.3% in 2019. It held flat for Black households at 42.8%, “reflecting the legacy of decades of discriminatory policies and inequitable access to homeownership,” the report concludes.

  • Nearly half of renter households lost income between mid-March and late September, and roughly one in five renters earning less than $25,000 said they were behind on rent. 

  • The vacancy rate for 12.6 million professionally managed apartments climbed to 7% in the third quarter of 2020, which is the highest level since 2010. 

  • Home prices continued to outpace incomes, lifting the price-to-income ratio to 4.3 in 2019. The ratio is well above historical levels, and closing in on the 4.7 peak reached during the housing boom.

2020 underscored the unequal access to quality homes and the vulnerability of much of our housing to natural disasters (most notably the wildfires in California). Income inequality between white and minority households widened sharply, and is putting homeownership further out of reach for many Americans. 

“Between the effects of the pandemic, the nation’s reckoning with its painful history of racial discrimination, and the series of devastating natural disasters, 2020 has been among the most difficult years in American history,” the report concludes. “All of these sources of distress have important ties to longstanding housing policy issues. The hope is, now that these challenges are so clearly in the spotlight, we can finally re-envision a national housing policy and recommit to the goal of a decent home in a suitable living environment for all.”

We couldn’t have said it better ourselves.

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Time for Action

So, what’s it all mean? What do we do to rectify the situation? Fair questions.

What’s clear is this: America needs more housing of all types, locations, and price points. The Joint Center for Housing Studies at Harvard’s findings paint a definitive picture of this.

We need to keep an eye on the market as it shifts under our feet. The work-from-home wave could have a major impact on mobility and reverse the trend of people moving to urban areas. It could kickstart a change in housing location preferences, leading buyers into more affordable options in outlying communities that are relatively far from employment.

Further, these trends could spell trouble if we don’t provide better safety nets for renters and homeowners.

“So far, state and federal moratoriums have slowed evictions,” says Chris Herbert, Managing Director of the Joint Center for Housing Studies. “But without additional federal aid, many households that have missed payments may be unable to cover their back rents and will find themselves on the brink of eviction and at risk of homelessness.”

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In Other News

  • USA Today reports that, despite federal laws protecting renters from evictions, hundreds in the Phoenix metro area may have been wrongfully evicted from their homes during the COVID-19 pandemic.

  • Speaking of evictions, nearly 6 million Americans could be uprooted from their homes when the CDC’s moratorium expires on December 31st. 

  • The incoming administration of President-Elect Joe Biden plans to fix discrimination in housing. Here are three ways how he plans to tackle it.

  • The median home price in California reached an all-time high of $712,430. This is part of a broader trend that puts prices for first-time homebuyers further out of reach.

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Parting Thoughts

We can’t allow rising home prices to fool us into thinking America’s housing system is truly prosperous, strong, and inclusive. Stable housing should be something every American can access, achieve, and afford. If we’ve learned anything from 2020, it’s that this is simply not the case.

Make no mistake, the pandemic-induced recession this year underscored existing systemic issues. It did not cause them. Economic inequality has been festering for quite some time. On the bright side though, 2020 did provide a silver lining.

This year gave us the opportunity to confront deep seated economic issues head on––they had nowhere left to hide. It became clear the status quo was no longer tenable. The binary option between renting and owning has left us without any choice at all.

Without access to own in our communities most of us are deprived of an important identity. Owning a stake in the place we call home bestows more than a financial benefit, it gives us a deeper sense of connection. It empowers us to derive more from where we live than simply having a roof over our head. That’s why we created this new category in housing––Rentership––because owning a stake in our homes is about more than creating value for ourselves. It’s about creating community.

As we reflect on the many challenges people confronted this year, we’ve never been more driven to deliver on our mission of turning every renter into an owner.