Long Term Impact of The Pandemic On Housing Affordability in Texas

For the longest time, Texas has had a reputation of being one of the most affordable places to live when compared to other US coasts. It’s also home to amazing architectural designs and beautiful rental properties such as these furnished homes in Austin, Texas.

But sadly, the state is gradually becoming less and less affordable, especially in metropolitan areas. This is thanks to the spread of Covid-19 that has continued to undermine the housing sector all around the world.

Even with the government’s quick response to policies and reforms, many negative effects continue to disrupt the sector greatly.

For example, eviction moratoriums or emergency rental relief policies helped thousands of renters during the pandemic. However, their effects were only temporary and the lack of affordable housing supply crisis in Texas still exists.

In this guide, we explore the long-term impact of the pandemic on housing affordability in Texas and some of the possible solutions that could help. Let’s dive straight in!

People still can’t afford all of their household needs

The economic recession has been experienced all over the world, and Texas is no exception. The heightened number of job losses and reduced work hours have meant that many families cannot meet their basic needs, including housing.

This has also increased the number of bank defaulters, with mortgage facilities exacerbating the housing sector’s negative effects. Ultimately, it has led to an increase in the number of homeless people in Texas.

COVID-19 affected members of society differently

Though the pandemic has greatly affected all members of society, the low-income group has faced more unemployment and job losses compared to other groups. This is mainly because low-income households have allocated a significant share of their already strained income to the bulging housing costs.

With the policies in place not having a substantial impact on how to deal with the pandemic, this makes low-income households more vulnerable to such shocks.

In addition, the financial crisis is affecting people of color communities at a disproportionate rate. The good news is that there have been efforts made by the public and private research and investments recently to create new affordable housing and preserve existing public housing.

If implemented properly, they can help increase housing stability and help reverse the longstanding inequities faced in the housing sector.

Renters are cost-burdened

Since the pandemic began, there has been high-income inequality and a greater wealth gap with home prices rising faster than household incomes. Wages are still largely stagnant and this has caused an increase in the cost of a burden on many families, especially those in low-income households.

Consequently, the high rates of housing cost burden not only affect individual families — but also limit Texas’ growth and ability to bounce back.

Increase in the number of defaulters

“Cost-burdened” households are those that spend between 30 and 50 percent of their income on housing costs, while the “severely cost-burdened” households are those whose costs exceed half their annual income.

The increase in cost-burdened and severely cost-burdened households has led to an increase in the number of defaulters. This has seen many homeowners lose their homes, and consequently increased the number of homeless people in Texas.

Mortgage lenders are still not at ease with the lending standards

As we said, the pandemic caused a spike in the unemployment rate, which has increased the mistrust of mortgage lenders. With the high rate of uncertainty for an economic recovery, lenders are still making it hard for people to access beneficial lines of credit in homeownership.

The decline in low-cost affordable housing

During the pandemic, the real estate market came to a halt in Texas and most parts of the country. This caused a ripple effect in the price of raw land and market-rate housing.

When the prices dropped, many construction and development projects couldn’t pan out, which led to less housing construction. This explains why the rising cost of existing affordable housing, especially in the large metropolitan areas of Texas.

The future of housing in Texas in a nutshell; bleak or promising?

The future remains uncertain despite the government’s concerted efforts to deal with the housing affordability problem. But as it stands, we don’t think it has done enough to come up with a strong solution.

Policies such as equitable community partnerships should be resourced with a greater focus on community-led and developed solutions. In addition, a national comprehensive eviction moratorium should be extended past the pandemic, targeting those in low-income households who are yet to shed off the impact of Covid-19 completely.