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Coronavirus Causing Affordable Housing Harder to Find – Winston Rowe and Associates
Limited upward movement of tenants from affordable housing to higher-end properties in the near future, which will hurt the availability of affordable housing stock.
By: Winston Rowe and Associates
Social distancing, a rapidly retracting job market, and various eviction and foreclosure moratoriums in various states and cities all point to reduced population mobility.
Affordable housing units were already difficult to obtain before the coronavirus outbreak. The number of U.S. households that were paying more than 30% of their income toward rent increased to 49.7% in 2018, up from 49.5% in 2017. With fewer people choosing to move because of economic uncertainty, even if they have the means, it will exacerbate the shortage.
Uneven growth in housing costs has exacerbated income inequality in the U.S. The bottom 10% of earners have seen their housing costs rise, while the richest quarter of the population has actually seen housing costs fall. The coronavirus pandemic is likely to accelerate this economic trend, Apartment List's report said.
That will exacerbate as new luxury apartment construction comes online nationally in 2020 and 2021.
Once the market reaches recovery, supply competition will drive prices down at the luxury end of the market, resulting in better rental deals for high-income households, while demand will continue to grow for affordable housing options.
People who can work from home have a distinct economic advantage, as they can continue to earn wages through a shelter-at-home order. Those workers also tend to earn more than those in the service industries, and have greater job security.
Over the next two years, higher earners will be able to take advantage of low borrowing costs for refinancing of homes, or access to abundant luxury rental inventory, while lower-income households will continue to struggle with economic uncertainty and more competition for limited affordable housing inventory.
The pandemic has accelerated the use of technology to facilitate sight-unseen housing choices in an attempt to keep robust leasing going.
This article was prepared by Winston Rowe and Associate a national consulting firm. They can be contacted at https://www.winstonrowe.com