Americans facing a Housing crisis with government support ending soon

The American housing crisis was already here and coronavirus has made it worse. The recession brought a wave of record-high unemployment. 

Among renters current on their rent, 27.8% used stimulus checks and 17.6% unemployment insurance benefits. 

And among mortgagees, who were up on their mortgages, 21.1% used stimulus money and 11.0% used unemployment insurance checks to pay their bills. 

Without the government extending more financial assistance to these affected families they would fall behind on their payments.

Many renters and homeowners are already going deeper into debt and using up their savings. 

More than one-in-five renters – 23.2% to be exact — who are paying their bills, went deeper into debt, for example, by using their credit cards, and 21.2% used savings. 

These shares were similar among struggling renters with 24.5% and 21.6%, respectively. Among mortgagees, who paid their mortgages, 24.5% went deeper into other debt and 23.3% used up their savings. 

More than one-third, 35.8%, of struggling mortgagees went deeper into debt and 31.5% dipped into their savings – and still are not able to afford their mortgage.

The federal government provided assistance to struggling families early on in the pandemic. 

This aid included moratoriums on rent and mortgage payments for federally backed properties as well as moratoriums on evictions and foreclosures. 

In addition, at the end of March, Congress passed the CARES Act that included stimulus payments, whereby adults could get up to $1,200 plus $500 for each child. 

The legislation added more financial support for struggling families after congress increased the amount of unemployment insurance benefits for a larger number of people than would have otherwise received such benefits. 

Renters and homeowners,  protections coupled with added income support allowed a lot of people to stay in their homes that otherwise would have been out on the street.

Much of this government support is gradually disappearing. Federal protections for renters last through July, while mortgage forbearance protections expire in August. 

Added unemployment insurance checks will also come to an end before July runs out. 

The end to government assistance is coming at a time when the unemployment rate is still at double digits and some states are re-imposing restrictions, forcing new ways of layoffs.

The labor market will also remain depressed for some time now with several businesses closing. 

Temporary layoffs will increasingly turn into permanent ones. All of this could result in massive evictions and foreclosures later this summer and in the fall.

Meanwhile, in LA, a group of housing activists is squatting in government buildings in California. 

It’s an extreme example of what is going on across the country.  People being told to stay at home, in homes they cannot afford.

Jenny Schuetz a Housing policy expert at Brooking institution fellow said “Incomes are just too low for people at the bottom. 

So these households can’t build up any kind of savings any rainy day funds, which means as soon as they lose hours or lose a job, they just can’t pay their basic monthly bills.

Joint Centre for Housing Studies of Harvard University found that 1 in 4 US renters spent more than half their income on rent in 2008. More than 36 million people filed for unemployment last month.

California State Transportation Agency –  The state of California said it does not consent to the reclaimers living in its properties but is “willing to work with” them to find new residences.