By Gregg Gerken, Head of Commercial Real Estate for TD Bank
Even prior to the COVID-19 pandemic, it was a struggle to build or find affordable housing.
But since the pandemic broke out, finding affordable housing may be even harder for those who now need it most.
A Problem Made Worse by a Global Pandemic
The lack of affordable housing was an urban, suburban and rural problem even before COVID-19. Rent-burdened families and seniors living on a budget reside in almost every small and large city in America.
While the $600 per month unemployment payments, stimulus checks and extension of eviction moratoriums have helped, the bottom line is that those most affected by COVID-19 financially still have the longest road to recovery and need more assistance – especially affordable housing – to get back on their feet.
The Tenant Versus Landlord Narrative
Multifamily housing renters are trying hard to make rent, but some just can’t, and that hardship then tilts onto landlords who are trying to cover payroll, taxes, utilities, upkeep and mortgages.
The looming crisis now is that millions of renters are behind on their rent with approximately $70 billion due in back payments that could create a wave of homelessness for the hardest hit renters once eviction moratoriums are lifted.
The situation is being presented as a battle between landlords and tenants, but it will impact everyone, and the number keeps growing. We all need to come together to work on how to ease the pain here without placing too much burden on one side or the other.
What Can Be Done
On a positive note, states and cities everywhere have recognized that addressing the rent crisis is critical, and affordable housing projects need to deliver units as fast as possible. Looking back at 2008, the development of affordable housing was identified early as an important way to stimulate economic recovery, and the federal government provided funds and tax relief that spurred immediate investment with the highest impact.
The ability to keep up with the growing need for affordable housing depends entirely on subsidy programs that fill gaps private lenders and investors can’t.
“Given the municipal tax and revenue losses already expected across the country, there’s going to be limited state and local resources to expand affordable housing, but, ironically, at a time when that’s probably needed more than ever,” says Andrew Warren, TD Bank senior vice president in Commercial Real Estate. “We have shovel-ready projects that can add jobs, revenues and services immediately, but they lack the funding resources to get them started.”
The federal government has the resources and responsibility to assist state and local governments that are fighting the virus and the economic fallout. A possible solution could be specific stimulus payments for struggling renters to pay struggling landlords. Regardless, with some effort, we can get ahead of rising evictions in the coming years at a time when affordable housing projects are some of the only new projects that are able to be financed.
TD is proud to be one of the leading banks committed to building and preserving affordable housing during this crisis through loans, investments and grants to non-profits that are helping address the fallout from COVID. These kind of community investments need to continue and even expand where possible.
— This article is posted as part of REBusinessOnline’s Finance Insight series. Click here to subscribe to the Finance Insight newsletter, a four-part newsletter series, followed by video interviews delivered to your inbox in March.