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"The Coming Wave of Evictions Is
More Than a Housing Crisis"
by Epic Economist
"A devastating wave of evictions is about to hit the United States, and this is more than a reflection of the dire housing crisis the country is facing – but proof that we are in a rigged system that doesn’t allow us to build equity through homeownership and continues to force us into renting properties that are getting increasingly more expensive and precarious at the same time. Right now, distortions are getting so extreme in the rental market that evictions in middle-class suburbs are rising faster than in lower and upper-income neighborhoods. Our middle class is being hollowed out, and poverty levels are on the rise again. Today, virtually everyone in the country is cost-burdened by rent. And experts are warning that housing insecurity will be the future of the vast majority of the U.S. population as affluent investors control 40% of single-family rental homes and hike rent prices to astronomical highs.
For the longest time, being able to afford decent quality, stable housing in a safe neighborhood was a critical component of financial and personal security for middle-income Americans. But the latest data shows that with each passing month, more and more middle-class households are getting priced out of middle-class neighborhoods. The number of middle-class families evicted from their homes in suburbs across the country has been on the rise for years, according to Princeton researchers.
And today, the rate of evictions in middle-class suburbs is at the highest level on record, growing at a faster pace than evictions in low-income neighborhoods, the researchers found. The Cleveland-Elyria, Ohio, metropolitan area experienced the largest increase in suburban evictions. With evictions of middle-income households rising by 55%.
With rent prices set to rise even further this summer, this could trigger a major eviction crisis and leave lots of middle-class and former-middle-class renters struggling to find a place to live. The tight housing market we have today is not giving any chances for millions of middle-income earners to start building wealth via homeownership. Prospective home buyers have been forced to grapple with not just high mortgage rates and home values, but also, competition from investors with deep pockets.
Estimates from MetLife Investment Management indicate that Wall Street investors are going to control as much as 40% of single-family rental homes by 2027. And that's a bad thing for the rental market as a whole. For the first time ever, 44 million American renters are spending 30% of their income on rent or more, something Moody’s Analytics calls a “rent burden.” Middle-income households renting a two-bedroom apartment in most of our metropolitan areas must direct 41% of their incomes towards rent every month. Meanwhile, 17 million low-income workers lose up to 55% of their pay just to cover rent. They are considered “severely housing cost-burdened,” and they are a single unexpected event away from losing their homes.
Unfortunately, it seems like this has been the plan all along. First, government officials fueled the growth of the largest housing bubble we have ever seen. Then, they allowed investors to snatch the supply of homes that would otherwise be bought by U.S. families, forcing people to be subject to absurd price increases, dismantling the middle class, killing the dream of homeownership, and making housing insecurity the new normal. It wasn’t supposed to be like this. Our leaders have broken our housing system, and by now, it is too late to find an easy fix, so we will all have to deal with this the hard way."
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