COVID pandemic amplifies urgency of reforming the American housing system

Housing for All launches today with episode 1 of...everything

Short on time? Read to the red line for the highlights. Want to learn more? Items that are bolded in the top section are expanded upon beneath the red line.

So many exciting things are in the works, but here is what we released today

Episode 1 of the podcast miniseries, Housing for All

With our friends at Outrageous Mechanisms, we distill all the essential information you need to know about reforming the American housing system into 4 episodes. OM specializes in some very funny podcasts, and they brought their energy and sense of humor to make a challenging topic engaging and interesting. In the first half, we had a wide-ranging conversation about how our housing system is worse than most people think it is, and how we often seek to use technological solutions to problems we already know how to solve. In the second half, we discuss the housing systems of Norway and Singapore, two excellent housing systems that prove the American housing system can be dramatically improved. You thought homeownership was the American dream? Both Norway and Singapore crush America’s homeownership rate.

All episodes are on Outrageous Mechanisms.

Episode 1 of our ongoing podcast, Housing for Us

We’re going to alternate between (more or less) sad stories, which will make a compelling case that our housing system is in urgent need of reform, and happy stories, which highlight housing systems that work well and thus prove that a better way is possible. Episode 1 is happy! We interview Dick, a resident of a NYC Mitchell-Lama cooperative. Dick claims that the Mitchell-Lama program is the best affordable housing program ever instituted in the US, and I think he’s right. If you’re not a podcast listener, read a summary below.

All episodes posted here. H4U may not yet be listed in your favorite podcasting app, but should be soon.

Video exploring why the free market does not (and cannot) build affordable housing

You might have guessed that the free market is not able to meet the need for affordable housing, but you might be surprised about how much it falls short. We were! Using a tool built by the Urban Institute and National Housing Conference based on real-world data, we learn that an apartment that charges affordable rents will never generate enough revenue to pay back the loans needed to build it.

See the video here and subscribe to our YouTube Channel.

And of course, the website is beautiful

Check it out at A few things you’ll find when you look around:

  • We’re building a directory of organizations looking for volunteers to address housing issues, but it’s a little skimpy so far. We need your help to fill it up! The full directory and instructions for submitting organizations are here.

  • Want to go from clueless to capable on housing policy? Check out our recommendations and detailed reviews of important work on housing systems.

The housing crisis triggered by COVID is of historical proportions

  • In fewer than six months (mid-March to early September), expiring eviction moratoriums likely led to a stunning 433,700 people unnecessarily catching the virus and 10,700 people dying unnecessarily. Unsurprisingly, forcing people to live in homeless shelters or double up with relatives has contributed to the spread of the virus. When states ended eviction moratoria over the summer, they literally killed people.

  • There is so much conflicting data in the media about the effect of the pandemic and lockdowns on housing. One survey consistently finds a quarter to a third of Americans unable to make full, on-time housing payments, while one survey consistently shows that the pandemic has had almost no effect on Americans’ ability to pay rent. We make sense of this seemingly conflicting data below.

  • The National Low Income Housing Coalition’s annual “Out of Reach” report demonstrates the ludicrous cost of housing. This year’s report shows a totally broken housing system even before the pandemic arrived.

  • Armageddon approaches as the federal ban on evictions is set to expire in a week and a half. Some state eviction bans will expire, too. 12 million renter households could be evicted, with unpayable bills of several thousand dollars for unpaid rent. We discuss how the ban has helped, how it has not, and where to find information on eviction protections (if any) in your state once the federal ban expires.

  • A similar catastrophe is not imminent for homeowners. This is because protections against foreclosures are far stronger than protections for evictions, though there are gaping holes.

  • The Census Bureau’s most recent numbers (from November) indicate that 1 in 6 renters is behind on rent, and a shocking 34% of American adults had trouble covering basic expenses like housing, food, car payments, medical expenses, or student loans. 26 million adults, or a staggering 12% of the adult population, reported that their household did not have enough to eat sometime in the past 7 days. The Center for Budget and Policy Priorities points out that this is more than three times the number of adults who lived in households without enough to eat at any point in 2019. Most people will pay their housing costs before any other bill -- including food. This is a crisis of historical proportions.

    • As usual, children are disproportionately affected by hardship. CBPP highlights that 45% of all children live in households that struggle with meeting basic needs (like food), as are 42% of adults with children. By comparison, 29% of American adults without children are struggling to meet basic needs.

  • Racial disparities are both shocking and unsurprising; a survey from September found that Hispanic renters are twice as likely to be behind on rent as white renters, black renters 71% more likely than white renters, and Asian renters 46% more likely than white renters.

Mitchell-Lama program

The topic of our podcast’s first episode is the Mitchell-Lama (M-L) program. M-L is an affordable housing program created by New York State. It has built about 60,000 units of limited equity cooperative housing in New York City.

A cooperative is a form of homeownership, like a condominium. Both a cooperative and a condominium are large buildings with many units of housing; in both, the residents own their individual unit of housing. In a condominium, a for-profit company owns and manages the building; in a cooperative, the building is owned collectively by the building’s residents. In a condominium, the for-profit owners make all the management decisions; in a cooperative, the residents themselves do, taking turns serving on an elected board. Residents of housing cooperatives have control over their housing in a way that residents of condominiums do not.

There are cooperatives off of Central Park in New York City where a studio sells for $3-4 million, with larger units selling upwards of $20 million, or even higher. These are unrestricted cooperatives; the owner is free to sell her unit of housing to whomever she wishes for whatever price she can get. M-L cooperatives instead have limited equity: a M-L cooperative owner can only sell her home for an affordable price, and only to a household with a low- to moderate income.

For this episode, we speak to Dick, who has lived in his Alphabet City M-L cooperative since the ‘60s. Before we sat down, he gave me a tour and showed me his “million dollar view” of downtown Manhattan, a breathtaking view of the city that would cost an eye-popping sum of money to afford outside of the M-L program. Many M-L units are like Dick’s: great units of housing in enviable locations. If unrestricted, Dick’s unit of housing and many other M-L units could find buyers willing to pay millions of dollars. Instead, they’re reserved for affordable homeownership.

In the full interview, Dick explains the full workings of the program as well as ongoing efforts to privatize M-L buildings. Because these buildings occupy prime real estate in New York City, privatizing these buildings would be big money for private real estate interests.

For me, the best part of the interview was hearing about the tight-knit community that has formed in his building, particularly in how they responded to the Hurricane Sandy disaster. Overall, M-L is a great model; we’d all be lucky to live in one.

COVID-19 housing issues

The COVID-19 pandemic has shattered an already broken housing system. Let’s look at the catastrophe unfolding.

American households buckling under housing costs

Four data sets illustrate how deeply millions of American households struggl with housing costs — including before COVID-19 arrived. The pandemic has made a terrible situation dramatically worse.

Apartment List had been surveying Americans on housing costs each month. The last time they did the survey—published on September 9—a shocking 29% of American households were unable to make a complete, on-time rent or mortgage payment. For August and July, that percentage was a whopping 32%. Renters continue to be worse off, with 32% unable to make a complete payment on time in September, and 35% in July.

Apartment List’s numbers have been consistently higher than two other sources, the Census Bureau and the Mortgage Bankers Association(pdf). For example, the Census Bureau found that 13.3% of homeowners with a mortgage and 16.6% of renters were unable to make a full payment for the month of June; the Mortgage Bankers Association consistently reports a few percentage points lower than the Census Bureau.

The dramatic differences in the data can be mostly explained by the types of questions asked. Apartment List’s survey only asks about on-time payments, whereas the Census Bureau and Mortgage Bankers Association’s surveys ask if the previous month’s payment was made -- even if that payment was late. In other words, Apartment List is reporting all missed and partial payments -- even if those payments were made up later in the month -- whereas the Census Bureau and Mortgage Bankers Association only report missed and partial payments that were not eventually made up later in the month.

Why this would result is such a dramatic difference is illustrated by a chart prepared by the Mortgage Bankers Association (of data from the National Multifamily Housing Council), showing that nearly all missed payments are made up by the end of the month:

Because an eviction or foreclosure can be commenced with a single late payment, it is extremely misleading to lump late payments together with on-time payments, as the Census Bureau and Mortgage Bankers Association do. Only Apartment List asks specifically about payments being late and therefore better captures the share of households that could be at risk of displacement by eviction or foreclosure.

A fourth dataset, from the National Multifamily Housing Council, actually shows the pandemic has had almost no effect on people’s ability to pay rent.

Some things to know about the NMHC’s dataset: it only includes renters, and it is not a random sample (as the other datasets are). NMHC is an organization of professional apartment managers; their dataset is comprised of data reported by their members. However, while it is not a random sample, it is enormous, accounting for a quarter of all renters in the US. If this dataset shows a problem, there is a problem simply because so many units are included in this sample.

The above table is of the NMHC’s dataset, and it suggests something extremely disturbing. By their data, the pandemic has had almost no effect on Americans’ ability to pay rent whatsoever. For example, a shocking 19.2% of renters had not made a full rent payment by June 6th, 2020. But 18.4% of renters had not made a full rent payment by June 6th, 2019. Similarly, by the end of June 2020, 4.1% of renters were still not current on rent. By the end of June 2019, 4.0% of renters were still not current on rent. Here’s a graph from the NMHC. Clearly, our housing system was in catastrophe mode long before the pandemic arrived. This graph from NMHC’s homepage also illustrates this disturbing point, showing little difference between 2019 and 2020:

Unfortunately, the NMHC’s sample seems to be the only publicly-available longitudinal data on late or partial rent payments. The Census Bureau only started asking people about housing insecurity during the pandemic; the Census Bureau’s American Housing Survey does not ask if people are behind on housing payments (the closest it gets to the question of ability to pay is to calculate housing costs as a percentage of income).

The Census Bureau’s most recent numbers (from November) indicate that 1 in 6 renters is behind on rent, and a shocking 34% of American adults had trouble covering basic expenses like housing, food, car payments, medical expenses, or student loans. 26 million adults, or a staggering 12% of the adult population, reported that their household did not have enough to eat sometime in the past 7 days. The Center for Budget and Policy Priorities points out that only 8 million adults lived in households where there wasn’t enough to eat at any point in 2019.

People generally budget for housing before anything else, including food. Thus -- as is dramatically illustrated by this Census data -- looking at data on housing insecurity simultaneously reveals a crisis of historical proportions and dramatically underestimates the true severity of the problem. NMHC renters may not have had a substantial increase in late payments relative to 2019, but they are surely cutting back on other essentials, like food and medical care, in order to pay for housing.

The different datasets (Apartment Listing, Census Bureau, Mortgage Bankers Association, and NMHC) all reveal a catastrophe a long time in the making. Obviously, this outrageous situation was caused by a sudden loss of income for millions of households across the country, and the failure of elected officials to replace lost income. The only possible result was millions of people going hungry and falling behind on housing payments.

Shocking racial disparities

The most recent Apartment Listing survey (from September 9) showed racial disparities shocking even by the standards of the American housing system:

24% of white renters reported being behind on rent, a catastrophic level. But twice as many Hispanic renters reported being behind on rent; at 48%, nearly half of all Hispanic renters reported being behind on rent. Black and Asian renters were not far behind, and well above the overall rate.

Armageddon approaches as eviction moratorium set to expire on January 1

The only thing keeping our current catastrophe from descending into a calamity is the CDC eviction moratorium.

How the eviction moratorium works

Until September 4, protections from tenants were a patchwork, determined state-by-state. These varied massively; Minnesota, for example, will not allow any evictions until the end of the pandemic. Meanwhile, 9 states had no protections in place, despite the severity of the crisis. 

Ths ended on September 4, when President Trump directed the Centers for Disease Control to use  their power under the Public Health Service Act, which empowers the federal government to implement emergency measures to prevent the spread of infectious disease. Through this moratorium, the federal government currently forbids nearly all evictions. The only tenants the moratorium does not protect are those with high incomes. If a renter’s income in 2020 is expected to be $99,000 or greater ($198,000 for taxpayers filing jointly with a spouse), they are not eligible. However, it’s doubtful very many people who earned six figures in 2020 would be unable to afford their rent, so in practice, this moratorium is nearly universal.

Expiring eviction moratorium will lead to a tsunami of evictions because the moratorium was poorly designed

The moratorium is scheduled to expire in a week and a half, on January 1, well before the pandemic will be under control. But the major problem is that the moratorium merely delays a tsunami of evictions. This is because the moratorium only allows people who can’t pay rent to stay in their homes; it does not forgive the payments they were unable to make. Rather, renters are forced to pay all rent they couldn’t afford in one lump sum once the moratorium ends.

The moratorium will expire on December 31. If nothing changes, there will be a catastrophic wave of evictions, though what happens to individual renters will depend on the state. Eviction Lab has a run-down of state eviction moratoria (or lack thereof). According to the most recent Census Bureau survey (from November), 1 in 6 renter households (that’s 12 million adults plus their children) are not caught up on rent. Moody’s estimates that these renters will owe an average of $5,850 in rent and utilities on January 1. Clearly, people who recently experienced job loss -- even if they ultimately were rehired -- will be unable to pay such a large bill.

Outside of federal or state moratoriums, many landlords have negotiated decreased rents with tenants who are unable to pay. The MBA’s surveys, discussed above, found over the summer that 11-16% of tenants have been making delayed or reduced rent payments with permission from their landlord.

The CDC moratorium itself has been criticized on numerous other grounds. For example, tenants must sign a declaration stating they are not paying rent; I’m not an attorney but I’ve been told by attorneys that this is an outrageous thing to ask a tenant to do, as it will make it impossible to fight an eviction come January. Absurdly, landlords are allowed to tack on late fees for missed rent payments, adding to the impossible sum tenants will owe on January 1. Finally, the moratorium does not prevent landlords from filing evictions, even if they can’t be finalized until January 1. Eviction Lab points out that eviction courts in many jurisdictions continue to process eviction filings in order to throw people out of their homes as quickly as possible as soon as the moratorium ends.

The moratorium is also difficult to benefit from. Tenants have to know the order even exists and the legal declaration they are required to complete in order to benefit from it. The moratorium is riddled with loopholes, with people who are clearly supposed to benefit being thrown out onto the street. In some jurisdictions, judges have simply ignored the order.

Allowing millions and millions of people to be evicted in the middle of winter, in the middle of a pandemic, would be a national disgrace. This is especially true since, as discussed above, evictions clearly lead to more infections and deaths).

As mentioned above, Congress was supposed to vote on an extension of this moratorium today, but did not. If they do, these data will have pressured them to do so.

Foreclosure moratorium is much better than eviction moratorium -- if you’re even eligible

Whereas the federal eviction moratorium applies to nearly all American renters, the federal foreclosure moratorium only extends to homeowners with a mortgage owned or backed by the federal government, through Fannie Mae, Freddie Mac, VA, and USDA. This does cover a majority of mortgages, but a large minority of homeowners with mortgages are without protection.

The National Consumer Law Center has a detailed description of how the moratorium works. In brief, lenders cannot initiate any foreclosures until January 1, and homeowners have the right to put their loan in forbearance if they can’t make payments. During forbearance, borrowers do not have to make mortgage payments and lenders cannot charge any late fees. This forbearance period lasts 180 days but can be renewed for another 180 days (meaning the forbearance could last for 360 days, nearly an entire year).

Overall, this is a stronger protection than for evictions. Since mortgage payments are put in forbearance, borrowers are not required to pay their missed payments in one lump sum at the end of forbearance. Their loan will continue to accumulate interest, but this can be paid back over many years. The foreclosure moratorium also lasts longer than the eviction moratorium, since it starts the day the borrower requests forbearance. Unlike the eviction moratorium, late fees are forbidden.

Borrowers must apply for forbearance by December 31.

While stronger than the eviction moratorium, there are some issues here, too. First, a large minority of mortgages aren’t protected. Second, most people don’t actually know that the federal government owns or backs their mortgage and therefore wouldn’t know they are eligible.

Some states have additional protections in place; Justicia has the most up-to-date state-by-state run-down of foreclosure protections. Kansas, for example, does not allow any foreclosures until January 27. Many states offered emergency financial assistance to homeowners struggling to pay their mortgage.

No, the pandemic didn’t break our housing system; it was already broken 

The American housing system was a disaster in urgent need of reform prior to the pandemic. For a quick example, in July, the National Low Income Housing Coalition released its annual “Out of Reach” report. It demonstrates the ludicrous cost of housing. Spending no more than 30% of your income on housing is the government’s definition of “affordable housing,” but as we discuss in our podcast miniseries, other countries use a lower number. Highlights of the report:

Out of Reach uses the concept of a “housing wage,” or the hourly wage a full-time worker must earn to afford a modest rental home while spending no more than 30% of their income on rent and utilities. In 2020, the national two-bedroom housing wage is $23.96 per hour. On average, a household must have an annual income of at least $49,830 to afford a two-bedroom rental home at HUD’s average fair-market rent of $1,246 per month. The average hourly wage of renters in the U.S. is $18.22, $5.74 less than the two-bedroom housing wage.

The federal minimum wage is $16.71 less than the national two-bedroom housing wage. Even taking higher state and county minimum wages into account, the average full-time minimum wage earner would have to work approximately 97 hours per week for 52 weeks a year to afford a two-bedroom apartment, or 79 hours per week to afford a one-bedroom apartment at fair-market rent. In no state, metropolitan area, or county can a worker earning the federal minimum wage or prevailing state minimum wage afford a decent two-bedroom rental home at fair market rent by working a standard 40-hour week. In only 5% of counties nationwide can a full-time minimum-wage worker afford a one-bedroom apartment at fair-market rent.

This is for people lucky enough to have a job. For people who can’t find work due or are unable to work — because they are disabled, elderly, or children, or are responsible for looking after small children — the situation is immeasurably worse.

Prior to the pandemic, tens of millions of Americans were buckling under the costs of housing. The pandemic took an already catastrophic situation and made it even worse. Let’s hope things don’t go back to normal. Normal was a catastrophe. Reforming the American housing system has always been urgent.

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