COVID-19 is speeding up white flight: Now is the time to invest in affordable housing

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Pennsylvania Eviction Crisis

During a protest organized by Make the Road Pennsylvania outside the Berks County Services Building in Reading, PA Tuesday afternoon September 1, 2020 to call for Gov. Wolf and the State Legislature to extend the eviction moratorium in Pennsylvania indefinitely. The group is concerned about the risk of eviction to people affected by the economic downturn resulting from the ongoing COVID-19 / Coronavirus pandemic. Ben Hasty/MediaNews Group/Reading Eagle via Getty Images

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The COVID-19 pandemic has effectively closed down large parts of the U.S. economy and fundamentally changed how Americans live their day to day lives.  While a lot remains unclear about the long-term impact of COVID-19 — like the efficacy and access to a vaccine, the implications of shifting to more permanent remote work, and the prospect of permanent job losses — however, one thing is certain: There will be permanent changes to how people work and where they live. Some more than others. 

Systemic inequities have particularly crippled Black and Latinx communities’ ability to weather this economic downturn. Decades of disinvestment, segregation and displacement have resulted in deep racial wealth divides between communities of color and their white counterparts. In cities struggling to provide affordable housing, COVID-19 could speed up displacement of communities of color. In areas where disinvestment has plagued communities of color for decades, COVID-19 will further erode the already fragile local economies. Nothing short of both public policy and private investments will ensure these communities aren’t insurmountably set back by COVID-19.

The pandemic has triggered the start of what might become a new round of “white flight” in some of the highest cost cities. Highways in the 1950s and 1960s allowed white families to flee integrated cities for new suburbs. Following white families’ departures, public and private investments in the cities faltered. Today, the agent of change is not the interstate highway system, but technological changes and a growing frustration with overcrowding and commuting. The pandemic has greased the wheels of a train that was already leaving the station. While companies and workers are rethinking the necessity of expensive office space, employees are reconsidering the need to live in some of the most expensive housing in the country.

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This is most apparent in the San Francisco Bay Area. Since the pandemic, there has been an exodus of tech professionals from a metro area where even the wealthiest workers often found housing prices to be out of reach. Many of those workers now find employers willing to let them work remotely on a permanent basis. This resulted in a record high rental vacancy rate in the city, which jumped to 6.2% in May, up from 3.9% only three months ago. In San Francisco itself, rents are down 20% when compared with rent this time last year. This resulted in stalled construction for many new buildings as construction costs have not lowered with market rent. 

The disruption of local housing and employment caused by the shift to remote work disproportionately impacts people of color.  Lower-income families cannot benefit from lower rents on market-rate and luxury housing units. Iit is communities of color that continue to see the most severe impact to their income and who are more likely to report having trouble paying rent during this time. For many households of color there is little opportunity to move or retrain quickly if remote work indelibly alters the employment landscape of America’s cities. 

In other high-cost cities, the pandemic is creating the perfect storm for further gentrification and displacement. Communities of color have historic and ongoing challenges attracting investments to spur economic activity. Investments have historically been aimed at attracting a wealthier, and often whiter, demographic. These new arrivals often fail to become a part of their community, instead displacing the people and institutions that existed for decades.  Large scale displacement and gentrification was seen clearly in the aftermath of the 2008 housing crash and has the potential to be stronger following the pandemic. Increased and prolonged job loss among people of color could leave landlords eager to offload their buildings to developers who can withstand economic recessions. 

New York City is a prime example. As the initial rush to the suburbs during the pandemic has started to ebb, higher-income renters and buyers are returning and taking advantage of high vacancy rates. In some cases major tech companies, that are reducing their footprint in California, are taking advantage of the pandemic-induced flight of commercial tenants to expand their presence in New York. This has implications for residential real estate as well. In some low-income communities of color, rents have risen 22% in the years leading up to the pandemic. These areas continue to see a slow ascent in rents that is not seen in more affluent areas.

Rent increases in already high-cost cities further strain households of color and fuel displacement. Eviction moratoriums, unevenly implemented by federal and local authorities, will expire as we enter the “recovery” phase of COVID-19.  Similar to the housing crash of 2008, this recovery will not automatically account for inequities in communities of color. Rent increases will lead to further overcrowding, evictions, and homelessness in these areas as poverty becomes more concentrated. Developers will rapaciously invade communities of color to build housing for the wealthier, and whiter, families that are insulated from the worst impacts of COVID-19

In both scenarios, communities of color in the high-cost metros will not fare well without significant interventions. State and local governments should seize the opportunity to acquire properties during the slow real estate market. There could be less expensive land and in some cases entitlements that municipalities can leverage to expand affordable housing and affordable commercial properties. The formation of community land trusts in areas prime for gentrification can be critical to preserving existing affordable housing and building wealth in communities of color. In addition to government efforts, it is incumbent on other anchor institutions such as banks, healthcare networks, and academic institutions to make similar investments in affordable housing. These investments will be most impactful if done in collaboration with community stakeholders who can ensure that interventions address the needs of communities of color. 

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While some cities have made eviction moratoriums permanent, there are other policy changes that are essential to helping the resilience of communities of color.  Local policies that should be considered include programs that help business owners buy their buildings and down-payment support to help renters transition to homeownership.  Similarly, there should be coordination with local lenders to help keep families in their homes and to buy up vacant homes to keep them out of the hands of investors using community land trusts or other mechanisms.. State and local governments can create laws that limit the real estate speculators and developers from driving up the cost of living by flipping homes and turning them into units. Policies expanding section 8 programs and rent control housing stock will help existing residents stay in communities that are ripe for gentrification. At the federal level, the passage of a fully funded version of the HEROES Act would offer broad support to renters and landlords.

We don’t know what the outcome of the COVID-19 means for homeowners and renters yet. But whether it be a new kind of white flight or rampant gentrification and displacement, we know that communities of color will bear the brunt of the costs. The time is now to consider how to change that narrative before it is written.