Ideas to reform the rental housing market
Our country is finally turning the corner on the pandemic. Vaccinations are increasing, rates of infection and death are decreasing, and normalcy seems within reach. But far too many Americans are still in crisis, including renters who had been vulnerable to housing instability and economic struggles long before the coronavirus hit our shores.
After all, the rental housing supply has been insufficient for at least a decade, far longer for renters with low-to-moderate incomes. By 2018, almost half the country’s renters were paying more than 30 percent of their income on rent each month, making it tough or impossible to build a cushion for emergencies or income loss, let alone to build wealth through homeownership. Many renters then lost jobs during months of lockdown. Though COVID-19 stimulus payments and enhanced unemployment benefits helped many remain in their homes, others amassed large balances in unpaid rent. And now, the national eviction moratorium is set to expire in less than a month.
As the nation shifts toward a new normal, changemakers can use this moment to thoughtfully and intentionally address the underlying issues that have contributed to a shrinking and increasingly unaffordable rental housing market. In the process, they can help stabilize renters, including seniors, teetering on the edge of eviction and homelessness.
Right now, amid mounting legal pressures and challenges (PDF), it seems unlikely the eviction moratorium will be extended. Meanwhile, state and local governments are struggling to distribute quickly enough almost $47 billion in emergency rental assistance to the renters most in need.
These supports are critical, but they cannot fully address the rental crisis. Demand for rental housing is growing and is expected to continue increasing through 2040, according to data from my Urban Institute colleagues. However, the supply—especially of moderate- and low-priced rental housing—has been woefully thin since at least 2009. It cannot meet current demand. And the costs of multifamily construction continue to increase, making building and renovating rental units affordably even more difficult because of labor and material shortages, among other challenges.
The American Rescue Plan Act and American Jobs Plan provide and propose significant resources to improve some of these housing challenges. But these investments alone will not solve the rental housing crisis or repair historic inequities in access to affordable housing, especially in communities of color. Instead, all facets of the system need to be attuned to expand the supply of affordable rental housing fairly, including lifting restrictive local zoning laws and other land-use regulations that reduce overall housing stock and perpetuate economic and racial segregation and expanding programs that protect the supply of small, unsubsidized rental properties, which often offer more affordable rents.
Policymakers and advocates can also consider how to reform the financing of rental housing to help accelerate production and preservation. In Urban’s recent work with some members of our Renters and Rental Market Crisis Working Group, we recommend evidence-based ways to do just that, including increasing access to affordable, flexible capital and coordinating requirements across programs meant to preserve and expand housing supply. Taking such actions, my colleagues suggest, will create a faster, less costly system for generating more affordable housing. These latest insights are part of a larger body of solutions Urban continues to provide, showing how to help ensure all people have access to quality, affordable places to live.
As the country begins to find its footing again after an unprecedented year, I hope you will take a moment to digest our research on the rental crisis and its effect on some renters. As we all know, a home not only (ideally) offers stability—it also has profound consequences for people’s health, safety, education, employment, and wealth building. And everyone deserves the opportunity to experience the positive outcomes of housing, no matter their zip code or the dollar amount on their paycheck.