The nation’s housing problems have been exacerbated by the events of 2020—the COVID-19 pandemic, racial injustice, and the harsh impacts of climate change. The Harvard Joint Center for Housing Studies’ (JCHS’) “2020 State of the Nation’s Housing” report shows that these challenges put even more into focus the lack of affordable rental housing, unequal access to quality homes, and the vulnerability of housing stock to natural disasters.

According to the report, the economic downturn created by the pandemic has worsened affordability challenges. The economic impacts have been far reaching, with 49% of renters and 36% of homeowners experiencing employment income loss between March and September.

It also has affected some populations more than others, with renters earning less than $25,000 a year much more likely to report lost employment income since March and more than half of the lowest-income renters losing wages during this period compared with 41% of all households. In addition, 23% of Black and 20% of Hispanic renters were behind on rent as of September compared with 10% of white renter households.

“So far, state and federal moratoriums have slowed evictions,” says Chris Herbert, JCHS managing director. “But without additional federal aid, many households that have missed payments may be unable to cover their back rents and will find themselves on the brink of eviction and at risk of homelessness.”

The report also points out that low-income and households of color have taken a disproportionate hit on the homeownership side, with 44% of owners earning less than $25,000 a year reporting income loss between March and September. While 7% of white homeowners were behind on mortgage payments in late September, the share was nearly two-and-a-half times greater among Hispanic (18%) and Black (17%) owners and twice as high among Asian owners (12%).

Racial Disparities in the U.S.

The report shines the spotlight on residential segregation. Nearly two-thirds of low-income Black, Hispanic, and Native American individuals live in communities with poverty rates above 20%, twice the share of low-income white individuals. The black-white homeownership gap is 31 percentage points, larger than it has been in decades.

“Widespread calls for racial justice have pointed out the high degree of residential segregation and economic equality that still exists in the U.S.,” says Daniel McCue, a JCHS senior research associate. “In fact, the sharp racial disparities in housing are both a cause and a consequence of other social inequalities.”

Climate Change Challenges

2020 has also been one of the worst years on record for natural disasters, matching previous-record-setting years with more disasters yet to be measured. As of September, 16 billion-dollar disasters totaled nearly $50 billion in damage and already surpassed the total number and costs of disasters in 2019.

According to the report, climate change also is adding to the number of low-income households facing energy insecurity with record summer heat adding to utility bills and threatening the lives and health of those without air conditioning.

Multifamily Uncertainty

Prior to the pandemic, rental housing demand had seen some slowing as millennials aged into their prime home buying years. The number of renter households fell in 2017 and 2018 before rebounding in 2019.

The report states that rental demand is likely to weaken further as those faring financially well look to the home buying market, others losing income double up, and young adults who can go to school or work from home move back into their parents’ homes.

This softening demand has been accompanied by new steady supply, with CoStar data for 12.6 million professionally management apartments showing the vacancy rate at 7% in the third quarter; this is the highest level sine 2010. Rents also have responded to the occupancy rates, with CoStar finding 0.6% nationwide drop in the third quarter.

Single-Family Resiliency

At the start of the year, the national homeownership rate climbed back up to 64.6%, an increase of 1.2 percentage points from 2016. Although hitting a halt during the COVID-19 shutdowns, sales of both new home and existing homes are expected to exceed 2019 levels.

Another bright spot has been that single-family construction started the year at its fastest rate since the Great Recession. After a brief pause due to the pandemic in April, it was at 1.1 million annual rate by September, a 22% year-over-year increase. However, the supply of homes hasn’t kept pace with demand, in part due to historically low interest rates. Only 1.47 million existing homes had been on the market in September, the lowest level in decades. With a K-shaped recovery, those who have maintained recovery will likely continue to fuel that demand.

What’s Next?

The pandemic has underscored the importance of secure, adequate, and affordable housing and the need for a new national housing agenda, according to the JCHS.

“To be effective, a new national housing policy would set out the appropriate roles and responsibilities of federal, state, and local governments in meeting the country’s needs,” says Herbert. “Among other things, it would establish funding sources and distribution channels for subsidies, create incentives for efficient private production of housing through regulatory and tax structures, and ensure the availability and affordability of mortgage financing as well as the stability of the housing finance system.”