The Price of Keeping People in Their Homes

Analysis from the Urban Institute found that the cost of housing assistance for both renters and homeowners could cost between $40.5 to $162 billion. 

“In the context of a $2 trillion legislative expenditure, this is a small amount that could go a long way toward stabilizing the housing market while allowing families to remain in their homes,” said the report. 

Agencies such as the Federal Housing Administration, Fannie Mae, Freddie Mac, the U.S. Department of Veterans Affairs, and the Department of Agriculture have announced foreclosure and evictions moratoriums due to the spread of COVID-19. The report said these agencies cover about 70% of all outstanding mortgage holders—33.4 million homeowners. 

The report adds that homeowners with private mortgages held by banks or private investors, roughly 14.6 million homeowners, are not covered. 

Urban Institute’s report said renters were more financially vulnerable than homeowners going into this economic downturn, as they have more of their monthly income going towards housing. Rent payment accounts for 30% of a typical rent’s household income, which is a steep increase from 19% for homeowners with a mortgage. 

The research ran calculations, assuming 20% of renters and 12% of homeowners will need assistance. In a worst-case scenario, they doubled the share to 40% and 24%. 

For their calculation, they used $912 as the median 2019 rent cost and $945 for the median 2019 mortgage payment.  

In these scenarios, 8.8 million renters and 5.8 million homeowners would need payment assistance, which would cost $40.5 billion for three months of $81 billion for six months. 

Under a worst-case scenario, 17.6 million renters and 11.6 million homeowners would need assistance, with the price tag being $81 billion for three months and $162 billion for six months. 

The Chief Economist at Moody's Analytics estimates that as many as 30% of Americans with home loans—nearly 15 million households—could stop paying their loans if the economy is closed through the summer.

“This is an unprecedented event,” said Susan Wachter, professor of real estate and finance at the Wharton School of the University of Pennsylvania, in an article by the Los Angeles Times. “The great financial crisis happened over a number of years. This is happening in a matter of months—a matter of weeks.”