Local Rents Poised For Pandemic-Induced Drop May Trigger Even Worse Affordability Crisis
OAKLAND (KPIX 5) -- Economists predict market-rate rent will drop in the Bay Area, which sounds like good news to the rent-burdened region, but the drop will likely worsen the housing affordability crisis for years to come.
According to Zillow, market-rate apartment listings are up 10% in the Bay Area, nationwide they're down 1%. Zillow Senior Principal Economist Skylar Olsen says that's because this health crisis is making it more difficult for people in the Bay Area to pay rent so many are just moving out.
"The scale of this was huge, the scale of the unemployment, the scale of the job loss is very substantial," Olsen said. "We will see so much pursuit of affordability strategies like doubling, moving in with Mom and Dad, you know, a roommate moving to a more affordable unit, or moving further out.".
Olsen said this will cause rents to drop in the short term, which might sound good now but it may cause developers to pull back, leaving the region with the same housing shortage down the road.
"The troublesome element of this is we could even see apartment buildings being converted to other use if the profitability of rent is challenged so much because the rent flow is gone," Olsen said.
"I definitely don't think that we were prepared for something like this and the systems that were put in place to protect us are kind of failing," renter Selena Bowie said.
A couple of weeks ago, Bowie had two jobs. Now she's down to half of one.
"As of today, I actually got furloughed from my job, I used to be a receptionist on weekends, and then I recently actually got my hours cut at my full-time job as well," Bowie said.
Inside her four-bedroom apartment in Oakland, anxiety is setting in. "My roommates have definitely been affected," she said.
Only one of Bowie's three other roommates still has a full-time job, another quit her job, moved in with her parents, and is now refusing to pay rent leaving Selena and the others to cover for her during the crisis.
"She went back on her word, actually, and left it up to me, my other roommate who actually lost her job, her full-time job, and my other new roommate who's also an essential worker along with me," Bowie said.
UC Berkeley's Terner Center for Housing and Innovation found of the roughly 5.9 million renters in California, 40% will struggle to pay rent because of impacts from COVID-19. 47% of renters will use stimulus checks and unemployment assistance to cover rent. That's what Selena and her roommates are doing to get by.
"We want to be in good standing with our landlord, so we decided to pay it, but obviously, you know, that takes away money from us that we're surviving on," Bowie said.
Last week, Governor Gavin Newsom compared the economic impact to that of the Great Depression. The Terner Center suggests embracing that mentality and expanding social programs.
The Great Depression brought about the birth of public housing, and researchers say now is the time to expand the safety net.