Home / Daily Dose / COVID-19 Causing Economic Hardship in California
Print This Post Print This Post

COVID-19 Causing Economic Hardship in California

Today, more than 30% of the income of over 3 million renters there go toward rent, while 1.7 million more pay more than 50%, according to a report from the Terner Center at the University of California at Berkley. Consequently, African-Americans, particularly, are being priced out of neighborhoods, cities and, in many instances, the state altogether.

On top of that, COVID-19 only exacerbates matters. Most likely, 2.3 million California households will feel the brunt of the economic tailspin stemming from the pandemic. As it is, paying rent already was a nail biter for half of those households.

This crisis is the byproduct of myriad factors, stated the report. For example, over the last several decades, economic and racial equality have significantly risen, while households are tumbling toward the financial bring due to a shortfall of affordable housing funding in the state and thin social safety net. As if that wasn’t plenty already, for decades, the housing shortage there has hung over the state’s head.

The Bay Area alone bears a housing shortage of 700,000 units, according to a recent SPUR study. It’s culminated in sky-high rents in the in the middle of the last economic recovery, worsening already inequitable racial outcomes.

One certainty: underbuilding housing no longer is affordable in the state. In the shadow of COVID-19, steps must be taken to guarantee new housing dodges the path it followed a decade ago, stated the report.

According to the report, steps toward supporting new housing already are being taken by the state legislature and administration. A gaggle of new housing bills; especially those introducing fresh spending, were iced for the year due to the truncated legislative timeline and yet more budget limitations. Nevertheless, numerous key bills remain on the table. Several specifically are earmarked as a component of Senate President Pro Tem’s Toni Atkins’ housing production package.

The housing might be the vector of hope in the clutches of the pandemic, according to Daniel McCue, Senior Research Associate at Harvard University’s Joint Center for Housing Studies.

During the last economic recovery, although housing caused more headaches than relief, more typically, the housing industry provides muscle in the midst of an economic bounce back—a reality in virtually every recession during the past five decades, said McCue.

One of the main points of difference between the housing market leading into the Great Recession and the market heading into today’s economic downturn is that the housing market prior to 2008 had a “substantial overhang of distressed and foreclosed properties,” which “needed to be absorbed before housing construction could be a driver of recovery,” McCue added.

In May, a $3 billion package from the Health and Economic Recovery Omnibis Emergency Solutions ACT (HEROES Act), received the thumbs up from the House of Representatives. The HEROES Act would inject approximately $200 billion in further housing aid, according to an American Action Forum summary. Financial and legal assistance for renters and mortgage holders with a federally back3d mortgage are provided by The CARES Act.

Meanwhile, to accommodate economic recovery through new homebuilding, the Terner Center report proposed a framework for evaluating no- to low-cost policy levers. This framework is viewed as a near-term guide for the next year by the Center that should be contemplated in conjunction with protection and preservation policies on top of advocacy at the federal level for renter support.

At the same time, in the long run, Terner Center acknowledges that its proposal represents only starting point and that to nip the tide of the state’s housing challenges in the bud, additional comprehensive and structural changes are necessary.

About Author: Mike Albanese

Mike Albanese is a reporter for DS News and MReport. He is a University of Alabama graduate with a degree in journalism and a minor in communications. He has worked for publications—both print and online—covering numerous beats. A Connecticut native, Albanese currently resides in Lewisville.
x

Check Also

FHA, FHFA Announce Extended Assistance for Homeowners

The Federal Housing Finance Agency (FHFA) announced that the GSEs—Fannie Mae and Freddie Mac—will extend ...

GET YOUR DAILY DOSE OF DS NEWS

Featuring daily updates on foreclosure, REO, and the secondary market, DS News has the timely and relevant content you need to stay at the top of your game. Get each day’s most important default servicing news and market information delivered directly to your inbox, complimentary, when you subscribe.