40 million Americans could be homeless soon, with ‘catastrophic’ impact on rest of economy
Experts warn that up to 40 million Americans may be spending their last months with a roof over their head before landlords begin serving eviction notices.
As the United States continues to struggle with growing coronavirus infections and varying degrees of local lockdowns, relief measures from the first stimulus package have run dry while federal and state eviction moratoriums are quickly being phased out.
And as tens of millions of people remain unemployed and continue to stay at home to avoid exposing themselves to COVID-19, experts warn that up to 40 million Americans may be spending their last months with a roof over their head before landlords begin serving eviction notices.
To make matters worse, the humanitarian disaster could have “catastrophic” effects on the entire housing market, with knock-on effects extending far beyond the housing and rental industry into the broader economy as a whole – leading to shrinking demand, collapsing housing values, and an all-out economic crisis that could be unprecedented in U.S. history.
Emily Benfer is the chair of the American Bar Association’s Task Force Committee on Eviction and co-creator of the COVID-19 Housing Policy Scorecard with the Eviction Lab at Princeton University. Speaking to CNBC, she warned that up to 40 million people face the imminent risk of eviction and homelessness in the coming months – about four times as many people as were displaced following the foreclosure crisis of 2008.
“The United States is facing the most severe housing crisis in history,” Benfer said. “Countless lives will be negatively altered solely because they couldn’t shoulder the extraordinary circumstances of the pandemic and economic recession.”
The massive extent of the crisis bearing down on U.S. society defies explanation, as well as any easy answers.
“This data shows us that all the terms people have been using to describe what’s coming — ‘cliff’, ‘tsunami’, ‘avalanche’ and so on — might actually be an understatement,” eviction expert and housing advocate John Pollock of the National Coalition for a Civil Right to Counsel said in a statement.
“The only reason we haven’t already seen two million eviction filings is because of all the CARES Act relief that at this point is either going or gone,” he added, noting that the end of expanded unemployment benefits, eviction moratoriums, and other expiring protections threaten to worsen the catastrophe.
But tenants aren’t the only ones who may be left out in the cold as a result of the eviction crisis. Landlords are also expected to default on mortgages if renters are forced from their homes in the middle of the bruising crisis.
“This really could be catastrophic, and it extends beyond just the rental industry,” Tendayi Kapfidze, chief economist at LendingTree, told CNBC.“It could actually affect the single-family housing market and the economy as a whole.”
And because Congress is faced with a partisan impasse over extending unemployment insurance to over 30 million jobless workers, Americans are seeing their already caved-in income fall from 50 percent to a measly 25 percent of their pre-pandemic levels.
Along with vanishing jobs, income, and government relief, Americans are also increasingly being forced to skip meals, go to bed hungry, or seek food assistance for the first time in their lives. Advocates fear that unless Congress urgently intervenes on that front, food insecurity could reach levels unseen in the modern era.
“Since COVID-19, thousands upon thousands of people jumped to action, continue to fight, to stand, to demand change,” Pollock tweeted on Monday afternoon. “These heroes & helpers represent America’s best. Unlike members of Congress willing to send 30-40 million Americans into homelessness, poverty and hunger.”
The cascading crisis threatens to slam other industries as well, possibly creating a feedback loop that can only worsen the economic woes of businesses and households across U.S. society.
“That could lead to a decrease in home values, even in the owner-occupied market, and in every state and every city there’s a patchwork of different, you know, kind of laws that people are using,” Kapfidze said. “So, really, it’s necessary that we have a federal plan. We need a federal plan to deal with this rental crisis or it’s going to get worse.”
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