Owning a home is the gold-standard of housing security. But for those who cannot afford to buy, they rent—and as of late, the market share of renters has steadily risen in light of new housing trends that started two years as the COVID-19 pandemic began to take hold of the market.
Today, there are about 44 million renting households in the U.S. Between the first and third quarters of 2021, an additional 870,000 households entered the rental market, which drove occupancy rates down to 5.8%—the lowest since the 1980s—and in turn pushed rents skyward by 13.8%.
As of the 2020 Census, there are about 330 million Americans living in 125 million dwelling units.
But according to the Joint Center for Housing Studies at Harvard University (JCHS) 40% of the nation's rental housing stock (representing 17.6 million dwellings) is in danger of experiencing “substantial annual losses from increasingly common environmental hazards” based on the census tract they have been placed in.
The Federal Emergency Management Agency assigns each census tract an “Expected Annual Loss Rating” ranging from “Very Low” to “Very High” based on the impact of 18 environmental hazards on people, buildings, and agriculture and the estimated economic loss in dollars tied to those potential events.
According to JCHS’s new America’s Rental Housing 2022 Report, these units can be affected by any number of disasters such as wildfires, flooding, earthquakes, or hurricanes and mainly lie on the West Coast, Gulf Coast, and the Central U.S., better known as “Tornado Alley.”
“California has the largest number of rental units at risk, with 4.5 million rentals (76% of the state’s occupied rental stock) located in census tracts with at least moderate expected annual losses due to likely hazards,” said Sophia Wedeen, a research assistant at JCHS. “Of these units, 1.6 million are located in areas with ‘Relatively High’ or ‘Very High’ expected annual loss ratings. Washington and Oregon also have significant numbers of rentals in areas with at least moderate expected annual losses, with around 85% of the occupied rental stock in each state located in such areas.”
Other states with particularly large numbers of rental units at risk include states in the South and along the Gulf Coast, including Texas (2.3 million units in areas with at least moderate losses); Florida (940,000); North Carolina (570,000); Tennessee (540,00); Louisiana (470,000); and Georgia (460,000).
While single-family rentals and pre-manufactured rentals are at the highest risk, an additional 2.6 million units in 2-4-unit multifamily buildings are at risk, as are 3.8 million units in multifamily buildings with 5-19 units and 3.5 million units in large multifamily buildings with 20 or more units are categorized as being in a “moderate risk” category.
Manufactured homes present additional problems: while there are only about 1.1 million units in high risk areas, they are the most likely of any structure to be at risk nationwide. These manufactured homes are also the most likely to be deemed “structurally inadequate” by the Department of Housing and Urban Development and are therefore especially vulnerable due to loss from environmental hazards.
The low-rents tenants are paying for some of these units also come into play in light of a disaster.
“Many of the units at risk are low-rent or subsidized. 4.0 million occupied units with contract rents below $600, representing 40 percent of those rentals, are located in areas with at least moderate expected annual losses due to environmental hazards,” Wedeen said. “As noted in [in the research], both the number and share of units renting for less than $600 have been on the decline in the past decade. With the supply of low-rent units already shrinking, massive losses of this stock from environmental hazards would leave lower-income households with even fewer affordable rental options.”
Additionally, 2.1 million subsidized units are located in these high-risk areas and 1.2 million of the 3.1 million units (39%) created under the Low-Income Housing Tax Credit are in moderate risk areas. An additional 700,000 HUD units (representing public housing, Section 8, affordable housing for retirees, low-income and disability housing) are at risk, along with 230,000 (of about 400,000) USDA-subsidized units.
Losing these units would give at-risk and marginalized renters little-to-no options for housing after disaster, which could set local markets back by years as everything is repaired or reconstructed.
“An increasing number of rental units will be at risk of loss due to environmental hazards in coming years. In the short term, damage from hazards will almost certainly drive up the cost of repairing and rebuilding rental units. Reducing the time to build replacement rental housing after a natural disaster and increasing the availability of post-disaster financial assistance for renters are both urgent priorities,” Wedeen concluded. “At the same time, the growing frequency and severity of hazards and the magnitude of their damages will likely make an increasing number of rental units uninhabitable, displacing residents and threatening to further reduce the supply of rental housing. A massive federal and local investment is needed to preserve the existing stock and adapt rental units to the wide range of acute and chronic environmental hazards exacerbated by global climate change.”
Click here to view a complete copy of the report.