May 26 2020 0Comment

The Squeeze of the Quarantine: COVID-19’s Impact on the Affordable Housing Gap

With countless businesses contracting and large numbers of industries laying off employees, the COVID-19 shut down is applying a major squeeze on the affordable housing industry and especially those lower-income families who rely on such housing. This “squeeze” can be seen in two primary ways: The challenges faced by the existing gap in construction and the direct impact on the nation’s most vulnerable economic population, low-income families. Here’s how:

The Construction Gap

While Maryland state leadership fortunately kept construction designated as an essential service during the pandemic, many questions arose related to social distancing, contracts, sub-contractors, etc. While these challenges are being continually addressed, an even bigger concern is that any delays exponentially cause projects to fall even further behind, a danger felt keenly by all stakeholders involved in the race to provide affordable housing to so many in the MD/DC corridor.

Let’s be honest, the odds were already stacked against contractors, builders, and grant-makers alike before the pandemic struck. According to a recent NLIHC study, there are only 37 affordable and available rental homes for every 100 extremely low-income households nationwide. In Maryland, these households account for 27% of all renters, a challenge compounded by the fact that at minimum wage, someone would need to work 109 hours per week to afford a 2-bedroom home at Fair Market Rent.

For now, the classification of affordable housing construction as an essential service remains in place for Maryland with re-opening discussions changing the conversation as we move into the summer. With support services and back office functions virtualized, the addition of hand washing stations at the job site and social distancing for those in the field have created a functional and compliant environment for the work to continue. Yet the impact of delays, layoffs, payroll protection delays, supply chain shortages, and a health-impacted workforce takes an already precarious scenario and makes it even more fragile.

And the biggest concern as we look ahead to the rest of the year? An autumn resurgence or second wave of COVID-19 shutdowns.

An Already Vulnerable Population

While the shutdown poses the risk of additional delays in the delivery of affordable housing for those in need, a second “squeeze” has been felt in that the number of vulnerable families caused by this crisis is increasing. In fact, one of the most stunning initial impacts of the COVID-19 shutdown was the immediate impact felt by those in the lowest economic brackets. According to a CNN article, nearly 40% of low-income workers lost their jobs in the first month of the shutdown alone. This was the first wave of damage felt by the pandemic. Another report from the Urban Land Institute captures the ripple effect well:

Before the outbreak, Yentel said, about 8 million people in the United States were not yet homeless but were considered severely cost burdened (paying 50 percent or more of their incomes for housing), often doubling up and tripling up with other households. “With such limited income, you have no cushion to absorb a financial shock, and the coronavirus is definitely a financial shock,”

The NLIHC predicts an increase of 1.5 million severely cost-burdened renters due to the increasing job losses in low-wage industries, a statistic that is not surprising given the initial impact of the COVID-19 shut down on service industry jobs and workers.

The squeeze is real; and the need is more important than ever. As lawmakers and state leadership evaluate the effectiveness of re-opening measures, let’s remember that the crisis we’re seeing with low-income renters isn’t new and is only being squeezed tighter than ever during the pandemic. It’s not a single crisis. It’s two.

The gap in availability for affordable housing and the economic frailty of our nation’s low-income families creates a precarious situation that impacts all of us. Hooten Construction is working with partners, sub-contractors, staff, customers, and representatives to ensure that we are doing everything possible to address the squeeze and stay on top of it.

To all those at the front lines of the pandemic… to all those advocating for affordable housing and to the people who speak for those with no voice. Thank you. Let’s fight the squeeze and make it through together.