Addressing the Housing Affordability Crisis as COVID-19’s Impact Continues

February 24, 2022

This post is the fourth in a six-part series titled “The State of Economic Equity.” This series examines the challenges facing vulnerable workers this year and possible ways to improve their economic security and resiliency in an economy reshaped by the pandemic.

Even before the COVID-19 pandemic, low-wage workers have struggled to pay for housing. The pandemic exacerbated this existing rental affordability crisis, as job losses and reduced hours forced many households to fall back on savings, credit cards and loans from friends and family.

Widespread job losses in the early pandemic—the most severe experienced in postwar America—heightened the housing challenge for millions of renters, especially for low-income households (households with incomes below 50% of an area’s median income).

This point was highlighted in America’s Rental Housing 2022 (PDF), a recent report by the Joint Center for Housing Studies of Harvard University. In the third quarter of 2021, nearly a quarter of renters (23%) reported that they had experienced a loss of employment income in the previous four weeks, which led many to miss rental payments, according to the report. The impact of job losses and wage cuts hit low-income renters hard, with the report noting that:

  • 23% of renter households with incomes under $25,000 fell behind on their rent payments.
  • 15% of renter households with incomes between $25,000 and $49,999 were in arrears.

Cost-Burdened Renters

While wages have been stagnant, rents continue to rise, which is increasing the cost burden on families. Cost burdens are a direct outcome of a lack of adequate supply and availability of rental homes and low wages. A household is considered cost burdened when it spends more than 30% of its income on rent and utilities.

The cost-burden problem is particularly acute for households with extremely low incomes; that is, their incomes are at or below poverty level or 30% of the area’s median income, whichever is higher. The National Low Income Housing Coalition’s March 2021 report The Gap: A Shortage of Affordable Homes (PDF) found that of 44 million renter households in the U.S., 10.8 million have extremely low incomes; of these 10.8 million households, 70% are severely cost burdened, spending more than half of their income on rent and utilities. The report also noted that 48% of extremely low-income renters are seniors or have a householder with a disability.

Low-income renters struggle to find decent affordable housing. In fact, for those making minimum wage, there is no place, as the coalition’s 2021 report Out of Reach (PDF) pointed out: “In no state, metropolitan area, or county in the U.S. can a worker earning the federal or prevailing state or local minimum wage afford a modest two-bedroom rental home at fair market rent by working a standard 40-hour work week.”

Historical inequities in education and the labor markets continue to contribute to the lower earnings of households of color. In turn, these lower earnings widen racial and ethnic disparities in housing. The coalition’s The Gap report found that 54% of Black renter households are cost burdened, followed by 52% of Hispanic renter households; the rate for white renter households was much lower at 42%

Without an affordable place to live, low-income and severely housing cost-burdened renters may have to make trade-offs that threaten their health, safety, and well-being. The Gap report also noted that before the pandemic, extremely low-income renters faced a shortage of nearly 7 million affordable rental homes, which means there were only 37 affordable and available homes for every 100 extremely low-income households.

Long-Term Needs

The COVID-19 pandemic has magnified the importance of housing stability for a household’s health and well-being. While a pandemic-related housing safety net including eviction moratoriums and emergency rental relief helped to keep millions of renters housed safely, these programs were temporary. Moreover, the country’s lack of a sufficient affordable housing supply persists. Public and private research and investments in new affordable housing and preserving public housing can help increase housing stability, decrease homelessness, help reverse the trend of longstanding inequities in the housing sector and remove barriers to safe and decent housing for all Americans.

About the Author
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Faith Weekly

Faith Weekly is a community development advisor, specializing in neighborhoods and housing, within the Institute for Economic Equity at the St. Louis Fed.

Woman with dark hair in business attire
Faith Weekly

Faith Weekly is a community development advisor, specializing in neighborhoods and housing, within the Institute for Economic Equity at the St. Louis Fed.

This blog offers relevant commentary, analysis, research and data from our economists and other St. Louis Fed experts. Views expressed are not necessarily those of the St. Louis Fed or Federal Reserve System.


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