Reflecting on 2021
Todd M. Richardson, General Deputy Assistant Secretary for Policy Development and Research.
Echoing the message of Secretary Marcia Fudge, on behalf of HUD’s Office of Policy Development and Research, we offer our condolences to the families of those who lost their lives in the fires on January 5th at a public housing property in Philadelphia and on January 9th at an apartment building in the Bronx.
The last year has been a year of startling statistics. During 2020 and 2021, many of the data points that we monitor for small changes — such as gross domestic product, employment, inflation, home sales prices, and rents — experienced sudden dips followed by even more astounding growth. These changes are both indicators and instigators of how our lives are being transformed in unexpected and dramatic ways.
The Office of Policy Development and Research (PD&R) is the research and data arm of HUD. We have reported on these astounding changes in 2021 in order to better understand these changes and to help guide future policy. We certainly are not alone in this effort, as a variety of government agencies, as well as private research and advocacy organizations have also brought a variety of data and analysis tools to bear at this intersection of housing, health, and economic challenges.
To close out 2021 and consider where we are going in 2022, here are some of my observations of HUD’s important role in the current moment.
Preserving homeownership. The Federal Housing Administration (FHA) insures the mortgages of 7.8 million homebuyers. The pandemic led to FHA offering forbearance for 1.5 million of them and implementing other loss mitigation policies to keep them in their homes and preserve their equity.
FHA is not only preserving homeownership, it is also supporting those working on the front lines of the pandemic. Our research shows that before the pandemic, the most common occupations among households with FHA-insured mortgages were registered nurses, at approximately 213,000, followed by elementary and middle school teachers at 212,000.
Heading into 2022, we face two main challenges in the homeownership realm: first, providing access to affordable homeownership when home prices have accelerated by roughly 18 percent in the past year (by helping renters move to homeownership, we can relieve some pressure from the rental market), and second, preserving homeownership for the 660,000 FHA mortgage holders who are still seriously delinquent. Fortunately, FHA is in a strong financial position entering 2022 with a capital reserve ratio of over 8 percent. Beyond FHA, the macroeconomic challenge is expanding the supply of housing available for sale. The Census Housing Vacancy Survey shows that the rate of vacant homes available for sale in 2020 and 2021 are at the lowest rates since 1978.
Stability for HUD-assisted households. PD&R research in 2021 showed that HUD-assisted tenants are at higher risk for death or serious illness from COVID-19. We also know from matching HUD-assisted records to the American Community Survey that HUD-assisted tenants often were working in jobs most exposed to the risk of coronavirus infection, including cashiers (177,000), home health aides (161,000), personal care aides (110,000), janitors (99,000), and housekeepers (93,000).
Using data from a sample of affordable multifamily housing providers, RealPage shows that rent payment rates for HUD-assisted tenants swung wildly as different employment supports, child tax credits, and stimulus payments ran their course. PD&R matched Census Pulse Survey data to HUD-assisted records (reflecting the Pulse Data Collection Period from July 21 to October 11, 2021) and found that HUD-assisted tenants were behind on rent at rates only slightly worse than those of renters in general, while their fear of imminent eviction was at rates similar to those of the general rental population. Given the extremely low incomes of HUD-assisted tenants, having these rates on par with those of other renters likely reflects the stability offered by housing assistance.
Heading into 2022, we face two main challenges in the rental assistance realm: first, expanding the number of rental units available for low-income tenants when asking rents (according to Moody Analytics) have increased by roughly 12 percent in the past year, and second, addressing the growing number of HUD-assisted tenants falling behind on rent and basic needs as other benefits such as unemployment and child tax credits expire.
Preventing evictions. Phase 1 of eviction prevention efforts during the pandemic involved federal government and local eviction moratoriums followed by the Centers for Disease Control and Prevention eviction moratorium. These moratoriums, combined with expanded unemployment insurance benefits, stimulus payments, and child tax credit payments, have kept eviction filings at the lowest rate we have seen for some time.
As eviction moratoriums have ended, phase 2 has been the unprecedented investment in the Emergency Rental Assistance program (ERA) run by U.S. Department of the Treasury, which has served more than 2.4 million renter households as of the end of October. Week 40 Pulse Survey data estimates (from December 1 to December 13, 2021) show that 2.43 million households applied for and received assistance, with 1.79 million households now caught up on their rent as a result of this assistance. Treasury ERA data show roughly 500,000 additional households are assisted each month. This investment is likely a major contributor toward keeping eviction filings well below the historical average in many parts of the country.
Nevertheless, 6.7 million renters reported being behind on rent in early December, averaging 2.2 months behind. Tracking these data reveals that as we help people with their rent, other renters are falling behind. This setback is likely due to the growth in asking rents in the past year, which was blunted somewhat by strong positive income growth for low wage workers in 2021. Heading into 2022, it will continue to be a priority that we address the supply problems that are driving up rents – passage of Build Back Better would help with this because of its capital subsidies to support developing new affordable housing. In the meantime, we will continue to work with PHAs and other housing providers so that every penny Congress has allocated for housing assistance, whether through our housing assistance programs or Treasury’s ERA program, are being fully utilized to help as many households as possible maintain their housing.
Responding to the homeless crisis. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), as well as Federal Emergency Management Agency assistance brought new resources to the homeless crisis, which was already in full swing before the pandemic. While the crisis posed new public health challenges, it also created opportunities to implement new approaches, such as developing more non-congregate housing options with these resources. The American Rescue Plan brought additional resources to the table, including a policy backed by our Family Options study research — Emergency Housing Vouchers — along with an increase in funding for the HOME Investment Partnerships funds to help the homeless, those at risk of homelessness, and other vulnerable populations, by providing housing, rental assistance, supportive services, and non-congregate shelter, to reduce homelessness and increase housing stability.
Although our work in 2021 to address homelessness is certainly to be proud of, rising rents risks triggering a cycle of severe cost burden, overcrowding, and homelessness for more communities in 2022. Our collective mission in 2022, then, is to address the housing supply problem.