Terner Center Report Shows Increase in Rent Arrears Among Affordable Housing Renters

The Terner Center for Housing Innovation at the University of California at Berkeley published a report, “Paying the Rent in a Pandemic: Recent Trends in Rent Payments Among Affordable Housing Tenants in California.” The study examines the effects of the pandemic on renters’ ability to pay rents. Rent data from Eden Housing, a large, mission-driven, affordable housing developer in California serving approximately 22,000 residents indicate that by December 2020, 5% of all Eden residents had unpaid back rent, more than two times the share of people who owed back rent in December of 2019.

The majority of Eden’s properties are financed with the Low-Income Housing Tax Credit (LIHTC) program, but some also use funding from the HOME Investment Partnership Program, Project-Based Vouchers, and U.S. Department of Agriculture’s (USDA’s) Rural Development program. Using a sample of 5,388 households and matching rent information with demographic data, researchers broke down rent trends.

More than 1,600 households missed at least one month’s payment between April and December of 2020, 50% more compared to the same period in 2019. More than 670 households missed multiple payments, and 160 missed more than 5 months. The average amount owed in arrears per household for any given month was $750. Of those who missed a rent payment in April of 2020, 62% had not caught up by December 2020. 

Ability to pay rent varied across income sources. Households least likely to miss a rent payment were those in which at least one member received fixed income or at least one member received fixed income and the household had tenant or project-based HUD assistance. Households who received tenant or project-based HUD assistance but received no fixed income had the highest nonpayment rates, a trend that existed before the pandemic. HUD-subsidized tenants tend to have very low incomes to begin with and can have their rents adjusted if they lose income. Despite this, many HUD-subsidized tenants have minimum rents and can still fall into arrears. Meanwhile, tenants without any rental assistance and without fixed income saw the biggest increases of missed rental payments, accounting for 56% of the number of households that missed at least one rent payment.

Family households headed by a single parent were most affected by the pandemic. By December 2020, 12% of single-adult households with children had missed payments, compared to 5% of households with children and multiple adults, and 4% of households without children. The share of senior households with missed payments did not change, so the uptick in missed rental payments from 2.5% to 5% in a year likely stemmed from households with children, which are less likely to have fixed income. Black households saw the steepest increase in nonpayment, with one in three Black households falling behind during the pandemic.

Non-payment rates varied across geography as well. Households living in areas where the pandemic had less of an effect on the employment rate, such as areas relying on agricultural work, saw fewer people behind on rent than areas more reliant on service economies. Areas with strong rent relief programs beginning early also had lower non-payment rates.

As a mission-driven organization, Eden works with vulnerable tenants to find help with rent and to keep them housed through existing residential services infrastructure, something the private market lacks. They also changed their policies, allowing for partial payment of rent beginning in March 2020. As a result, Eden residents likely fared better than private-market residents.

Read the brief at: https://bit.ly/2StUdrW