How the Housing Crisis and COVID-19 Are Creating the Perfect Storm

Both financial and health experts are growing increasingly worried about the effects of the COVID-19 virus on the housing industry. As more Americans continue to struggle to find employment in this unprecedented economic climate, there is an eviction crisis looming in the distance. While a global pandemic is scary on its own, it is compounded by the growing concern over the physical and mental health implications that come with having to endure an eviction.

There are a number of factors at play when looking at the convergence of COVID-19 and the housing industry.

How Evictions Affect Health

Past research has definitively linked the experience of a foreclosure or eviction to an increased chance that you suffer mental health complications. Some of the most common results of facing this type of housing trauma include the development of depression, anxiety, and substance abuse problems. This is particularly true for children who have to endure an eviction.

When faced with the mental health issues associated with eviction, it also makes it more difficult to stay on top of your physical health. This is a recipe for disaster when it comes to the worsening of chronic conditions such as diabetes and high blood pressure.

Spread of COVID-19 in Homeless Shelters

It does not take somebody with a medical degree to understand the risks that come with the spread of COVID-19 throughout a tightly packed homeless shelter. Adhering to social distancing rules while in a homeless shelter is virtually impossible in most places. It is not uncommon to discover clusters of COVID-19 in homeless shelters, especially those located in inner cities.

In addition to flocking to homeless shelters, many people also move in with family members after an eviction. These crowded housing conditions only serve to support the rapid spread of the virus. Then these individuals make their way out into the community to look for work, compounding the spread of the virus.

Exacerberating the Housing Crisis

Even prior to the COVID-19 crisis, the country was experiencing a situation with many people unable to find affordable housing. This pandemic has only served to exacerbate this situation. According to a recent study by Harvard University, almost half of all renters spend more than 30% of their total income on housing costs each month. In addition, over 10 million renters spend more than 50% of their income to put a roof over their heads. With margins this small, it makes sense that many Americans are living paycheck to paycheck. All it takes is a few weeks out of work for many families to fall behind on their rent payments.

Compounding the crisis is the fact that COVID-19 has been demonstrated to affect the minority population at disproportionate rates. A survey by the US Census Bureau Household showed that over 18% of renters were not able to pay their rent on time last month. This number is even higher in minority groups.

Will the Government Step In?

In the early days of the COVID-19 pandemic, the government acted quickly to help to mitigate the effects on the housing industry. As part of the comprehensive CARES Act, Congress issued an eviction moratorium on federally assisted housing and properties that were backed by many of the nation's federal mortgage programs. However, this moratorium expired at the end of July, taking the protection of 30% of the nation's renters with it. While many states and local governments have issued their own protections, some of these have also already expired.

With millions of Americans now at an increased risk of eviction, housing experts warn of the potential of increased levels of homelessness. Although Congress has met to discuss a new relief package, these negotiations have proved fruitless so far. In addition to the expiration of the eviction moratorium, the end of the provisions of the CARES Act also meant that millions of Americans were left without the supplemental unemployment benefits. Together, this could lead to a housing crisis like this nation has never faced before.

It has become clear by now that the COVID-19 crisis is not going to go anyway anytime soon. How it will affect the housing industry in the long-term is yet to be seen.

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