The Crisis within a Crisis
By Albert B. Kelly
The public health crisis that is the Covid-19 pandemic affects everyone, but the impacts are not equal nor are they consistent. As with most things, the impacts are to be most keenly felt among low and moderate incomes families and households. This has been true when it comes to employment as those at the bottom tend to be the ones on the front lines and no amount of recasting them as heroes will make the risk of becoming ill with the virus go down any easier.
However, the crisis that is brewing within the crisis that is Covid-19 will be the one that hits renters when this mess is over. In a community that has upwards of 60% rental properties, the impact on renters is always in the back of my mind. But it takes on greater urgency given some of the reporting that’s underway on the issue. A new study done by the Joint Center for Housing Studies at Harvard University seeks to measure just what renters are up against.
Over 20% of households earning $25k or less are behind on their rent while roughly 16% of those earning between $25,000 and $$50,000 are behind on their rent. The number drops slightly for those earning between $50k and $75k (9%). This assumes people are actually employed and earning wages, as opposed to those not working at all.
Recently, I heard about a Federal Reserve Study that estimates that Americans owe some $7.2 billion in unpaid rent. This amount, according to the study, comes as a result of some 1.34 million households being behind on rent to the tune of roughly $5,400 per renter household due to job loss from the pandemic- approximately 4.2% of all renter households nationwide.
This number of 4.2% doesn’t sound all that bad unless your one of the households behind or living in a community that has an abundance of rentals as we do. This is why the actions taken by Congress in the next handful of weeks will be critical in determining how many ultimately sink and how many might be able to keep their heads above water.
Of course there is another side to the issue which bears mentioning and it is simply that there are a certain percentage renter households, however small they may be, who are behind not because they can’t pay their rent but because they decided not to with a moratorium on evictions in place. Among this group are those who could pay without much struggle and those for whom paying might be tight, but they could still pay or at least pay something but don’t.
This is the crowd who lives for the moment and the very short term and figure they will deal with the fallout when it comes. I mention them because not all of those who will be facing eviction when it comes will be victims. The point is that it is not just renters who are impacted, but landlords as well. They are part of what makes local economies run and their impacts become ours and are felt throughout the local economy and beyond.
Say what you will about how the federal government handled the pandemic response, but it appears that one thing they got right was the extra $600 a week in unemployment insurance payments that expired at the end of July. The study suggests that if those payments had continued thru the present, only $125,000 renter households would be behind in rent.
As for New Jersey, it is estimated that the state has some 2,924,825 renters according to the Eviction Lab at Princeton University. There is a moratorium in place on evictions and foreclosures and this will be in place until 2 months after the public health emergency is declared over. Without some type of help, those households who through no fault of their own were unable to pay rent will find themselves in a desperate situation.
Having an eviction on their credit history will impact scores and make it that much more difficult for families to find new rental housing. Perhaps the government should consider how to get help to renters and landlords in a way that might include a joint application from both tenants, who do want to have the fallout of eviction, and landlords who simply want their back rents paid.
Whatever is decided, I hope it comes soon to avert this crisis within a crisis.