MReport July 2021

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46 | M REPORT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA Report Shows Increasing Insecurity for Low- Income Households The state of the nation's housing in 2021 includes tight supply, soaring home prices, and millions facing financial struggles, according to new research. T he disproportion- ate economic fallout from the coronavirus pandemic is becoming clearer as studies, such as Har- vard Joint Center for Housing Studies' "The State of the Na- tion's Housing 2021," emerge. Americans throughout the height of COVID-19 lockdowns experienced two divergent tales. Millions switched to remote work, saved their stimulus checks, and came out ahead. Others struggled, became ill, lost work, and face foreclosure or eviction. Programs that helped the latter, such as forbearance plans, will eventually expire. JCHS's study backs this up. Households on the brink of foreclosure or eviction not only are mostly those with lower incomes but they also tend to disproportionately be people of color, the study showed. "For those households with se- cure employment and good-quali- ty housing, their homes provided a safe haven from the pandemic," Chris Herbert, Managing Director of the Center said. "But for mil- lions struggling to cover the rent or mortgage, their housing situ- ations have become increasingly insecure, and these disparities are likely to persist even as the economy recovers, with many lower-income households slow to regain their financial footing." The report's authors affirm that policymakers have "taken bold steps to prop up consum- ers and the economy" but, they added, "more government support will be necessary to ensure that all households benefit from the expanding economy." JCHS's research supported much of what has been re- cently reported. The decades-long housing shortage grew more pronounced in the past year. Demand and competition soared; home prices shot up to record levels. Existing home sales in 2020 rose 6% and new single-family home sales jumped 20%, putting total home sales at their highest level since 2006, JCHS reported. And amid the tight supply, the homebuying binge continued among those Americans well-po- sitioned to make cash offers above the listing price. In late 2020, months of supply for existing homes dipped below 2 months for the first time ever, while median time on the market hit a record low of 18 days. Even as America's homeowner- ship rate continues to rise overall, a racial homeownership gap remains substantial, which is in part related to income inequality, JCHS reported. "In the first quarter of 2021, the Black-white homeownership gap stood at 28.1 percentage points, an improvement from the record high of 30.8 percentage points in 2019 but still large by histori- cal standards. Income inequality contributes to the disparities in homeownership, with the median income of white households ($71,000) some 65% higher than Black households ($43,000) and nearly 30 percent higher than Hispanic ($55,000) households. Accumulating the savings needed for down payment and closing costs is difficult for most first-time buyers, but especially for renter households of color." In a video call related to the re- lease of the JCHS study, Clarence Anthony, CEO & Executive Director, National League of Cities speaks about a section of the report that showed people of color, during the pandemic, have been hurt at four times the rate of white Americans. "What that says to us is that COVID-19 made us stop and pay attention to the facts and the data, and that is helping us to use the American Rescue Plan dollars in a more targeted, strategic, and outcome-oriented manner." He stresses that municipalities must partner with the federal govern- ment to create regional programs and policies. The study highlights the struggles of renters facing eviction (29% of Black, 21% of Hispanic, and 18% of Asian renters in arrears, compared with just 11% of white renters) and 2.3 million homeown- ers in forbearance programs set to end in July. The authors include recommen- dations such as: • Federal support for down payment assistance programs targeting people of color • Easing constraints on residen- tial development, such as the spiraling costs of materials and the shrinking supply of con- struction labor, with measures aimed at removing supply chain frictions and supporting workforce development, includ- ing immigration reform. • Easing restrictive land-use regu- lations and complex, time-con- suming approval processes—this is perhaps one of policymakers' biggest opportunities and chal- lenges, they add. "Policymakers at all levels of government must work together to reduce these barriers so that homebuilders can begin to meet the demand for modestly priced homes in a broad range of com- munities," the authors conclude. "The Biden Administration's proposal to link funding for affordable housing to state and local regulatory efforts provides a good template for how the federal government can incentivize these reforms."

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