From the U.S. Government Accountability Office, www.gao.gov

Transcript for: Rising Rents and COVID-19

Description: Dan Garcia-Diaz is with the Watchdog Report to discuss
GAO's review of rental housing trends and the impact COVID-19 could have
on rent prices.

Related GAO Work: GAO-20-427, Rental Housing: As More Households Rent,
the Poorest Face Affordability and Housing Quality Challenges
Released: June 2020

[ Intro Music ]
[Dan Garcia-Diaz:] Renters and property owners will be facing greater
hardships if the disruption caused by the pandemic continues. 

[Holly Hobbs:] Hi, and welcome to GAO's Watchdog Report, your source for
news and information from the U.S. Government Accountability Office. I'm
Holly Hobbs. 

The economic crisis caused by the Coronavirus pandemic has many
households worried about whether they'll be able to pay their rents or
mortgages on time. The federal government has provided aid through the
CARES Act to help some homeowners impacted by COVID-19. But what
assistance is available to renters? Today, we talk to our top housing
expert, Dan Garcia-Diaz, a managing director in GAO's Financial Markets
and Community Investment Team, about the impacts COVID-19 has on renters
and trends in renting prices. Thank you for joining me, Dan. 

[Dan Garcia-Diaz:] Thank you for having me.
 
[Holly Hobbs:] So, Dan, big picture. What's going on in the rental
housing market? 

[Dan Garcia-Diaz:] Well, even well before the pandemic crisis came, many
renters have been struggling to pay their rents for a variety of
reasons, including increased competition for affordable units and a
limited supply of them. About half of renters pay over 30% of their
income in rent. And about 24% pay over 50% of their income in rent. And
so the affordable problem, the rental housing problem, is more acute
among lower income households. And it means that these households just
have less money left over for other necessities, such as paying
healthcare bills or any other necessities. 

[Holly Hobbs:] If rents keep going up, why aren't more people buying? 

[Dan Garcia-Diaz:] After the Great Recession over a decade ago, renting
just became more common. Millions of households had lost their homes due
to foreclosures, and these foreclosures adversely affected their credit
scores, which delayed significantly their ability to return back to
homeownership. And so many of these households remained renters, not by
choice, but by circumstances. Also, we've seen a shift in demographics.
So, for example, millennials who, at the time, entered the job market at
the worst possible moment, had to compete for fewer opportunities. And
poor economic conditions delayed home ownership and kept them in the
rental markets longer than previous generations. 

[Holly Hobbs:] So, how could the current pandemic impact renters? 

[Dan Garcia-Diaz:] It's hard to tell right now. The impacts on rents as
a result of the pandemic hinges on how long the disruption in the market
will last, and how long it will take for people who have lost their jobs
to regain employment and lost income.

[ Music ]

[Holly Hobbs:] So, it sounds like this problem isn't going away anytime
soon, and could even get worse under the Coronavirus pandemic. Dan,
what's the federal government's role in helping with rent? And is there
anything in CARES for renters? 

[Dan Garcia-Diaz:] Yeah, so the federal government supports over 4
million households through various rental programs for eligible
households, usually low income households. But there are far more
renters who qualify for assistance and available funding under these
programs. But beyond direct assistance for low income populations, the
federal government actually plays a limited role in rental markets.
Policies that are set at the local level can have a big impact on the
availability of rental units. The CARES Act recently included provisions
to protect renters from evictions and properties that received federal
subsidies or have a federally backed loan. But these protections only
apply to a portion of the rental properties in the marketplace. So,
outside of these specific properties, some state and local governments
have taken steps to introduce eviction protection for renters. But
that's going to vary from location to location. Renters and property
owners will be facing greater hardships if the disruption caused by the
pandemic continues, and GAO will be examining this issue further in the
future. 

[Holly Hobbs:] So, Dan, I have one final question for you. What's the
bottom line of this report? 

[Dan Garcia-Diaz:] Renters, especially lower income renters, have
struggled to find affordable rental housing over the years. And we
expect that these challenges will continue as a result of the current
pandemic crisis. And it's going to make what was already a tough
situation even tougher. 

[Holly Hobbs:] That was Dan Garcia-Diaz talking about a new GAO report
on rising rents. Thank you for your time, Dan. 

[Dan Garcia-Diaz:] Thank you for having me. 

[Holly Hobbs:] And thank you for listening to the Watchdog Report. To
hear more podcasts, subscribe to us on Apple Podcasts, and make sure you
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For more from the Congressional Watchdog, the U.S. Government
Accountability Office, visit us at gao.gov.

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