Apartment dwellers and landlords across the country are bracing for a likely flood of evictions as a perfect storm of factors has pushed rental rates to historic highs.
More than 8 million people were behind on their rent at the end of August, and nearly half of those residents say they are somewhat or very likely to be forced out of their homes in the next two months, according to new Census Bureau figures reported by Yahoo News.
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This comes as the median rent in the U.S. hit a record-breaking $2K a month in June. Inflationary pressures and extremely low vacancy rates are behind the surge, creating an environment where more than 30 million people have seen their rent increase over the past 12 months, per Yahoo News.
The Federal Reserve’s attempt to curb inflation by pushing up interest rates is also putting pressure on the multifamily industry as once-aspiring homeowners find themselves no longer able to afford a mortgage.
At the same time, evictions are on the rise as assistance doled out by the federal government during the pandemic begins to dry up. Data from the Eviction Lab at Princeton University found evictions were 52% higher than average in Tampa, 90% above average in Houston and 94% above average in Minneapolis-St. Paul, according to Yahoo News.
Curbing evictions is essential to maintaining the health of the economy during the best of times, but especially during a downturn, Lending Tree Chief Economist Tendayi Kapfidze told CNBC. Dwindling rental income could render property owners unable to pay their own mortgages and finding new tenants is more difficult during a recession.
Policy changes and initiatives outlined in the Biden administration’s Housing Supply Action Plan are intended to tackle affordability, but many depend on cooperation from Congress. Among the actions the White House planned to take immediately were prioritizing housing density and affordability by awarding grants from the bipartisan infrastructure bill and directing Freddie Mac to purchase chattel loans, a type of financing specific to manufactured housing, for the first time.
In the meantime, millions of renters will need financial assistance for housing, according to the Center for American Progress. There is currently a shortage of more than 7 million affordable homes for the close to 11 million families considered extremely low income in the U.S., per data from the National Low Income Housing Coalition.
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