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The Impact of COVID-19 on Affordable Housing in the Central US

COVID-19 has impacted construction, rent collection and the future of the affordable housing crisis in the central US.

COVID-19 has impacted construction, rent collection and the future of the affordable housing crisis in the central US.


When COVID-19 arrived in the United States, so did uncertainty for the economy and the affordable housing industry in the Central U.S.

Demand for quality, safe and affordable housing remains high in the central states. However, unlike the coasts, the region doesn’t have as many population centers with high costs of living, like megacities New York, Los Angeles or San Francisco. Instead, it features both midsize cities—such as Austin, Texas; Nashville, Tenn. and Milwaukee—and rural areas.


CDB Central Map SAHC 2020

National average rent per unit, monthly. Source: Moody's Analytics REIS


How COVID-19 Has Impacted the Industry

The full extent of COVID-19’s economic, social and health impacts are still unclear, but the virus has already affected affordable housing. The industry may be further impacted by:

  • Missed rent payments: Unemployed workers received an additional $600 each week in unemployment compensation as part of a CARES Act provision that expired July 31. If the unemployment rate remains high and these benefits aren’t extended, landlords may see a significant number of missed rent payments. Similarly, as businesses exhaust their cash supply and relief funds, employees may lose their jobs if their workplace has not resumed operations.
  • Areas with demand: There is a constant need for affordable housing, and that need increases after a downturn. But the immediate, widespread business closings and affected population (working class employees in hospitality, retail, manufacturing and healthcare), make it unclear how much affordable housing will be needed and where.
  • Increased costs and delays: Most suspended affordable housing projects have resumed construction. However, supply chain disruptions and material shortages—especially lumber, whose production has been curtailed—may increase costs and delays.
  • Financial support from local governments: State and local governments often help fund affordable housing projects. However, these governments face their own COVID-19-related expenses with diminished revenue sources, such as sales tax receipts. This lack of revenue may reduce the funds available for affordable housing projects.


A Move to the Middle

Even before the pandemic, people began to shift away from the coasts toward the center of the country. COVID-19 may accelerate that trend. The high cost of living in big cities combined with business closings could cause residents—especially service workers—to move out of large cities or leave major metro areas altogether.

Where will they go? Likely, less densely populated areas with low or no state income taxes, job opportunities and warmer weather, like Arizona, Florida, Tennessee and Texas. When they arrive, they’ll need affordable housing.

The high cost of living in big cities combined with business closings could cause residents—especially service workers—to move out of large cities or leave major metro areas altogether.

Demand for Something Different

Aside from potentially shifting the population, COVID-19 may change the types of affordable housing people want.

  • The missing middle: Housing for households earning 60% of the Area Median Income (AMI) and luxury market rate units comprise the bulk of multifamily housing development. But workforce housing is missing. The last large scale, multifamily housing development for middle income families in the Midwest census region occurred in the 1970s—1,375 multifamily rental residences for middle income families were built between 1974 and 1994. In the same period starting a few years later (1999-2019), that number was just 812.1 Demand for modern workforce housing existed before the pandemic and can only rise as the emergency runs its course.
  • Niche affordable housing: Affordable housing units that target a specific demographic present a unique opportunity for developers. For example, Communities for Veterans' Freedom's Path housing was designed with veterans in mind. Located in Chillicothe, Ohio and Augusta, Ga. near the local Department of Veterans Affairs medical center, the projects offers priority placement for veterans who are homeless or at risk of becoming homeless. Cincinnati Scholar House focuses on single parents pursuing college degrees and provides its tenants with rental assistance. The residence also offers employment coaching and job placement, financial literacy and credit counseling, transportation assistance and help obtaining financial aid.
  • Single family home rentals: Many people pass through an apartment building daily, touching doorknobs, elevator buttons and shared amenities along the way. With the virus top of mind, tenants may opt to avoid communal areas by renting a single-family residence.


Finding Affordable Housing Solutions

Ultimately, COVID-19 has forced the world to rethink how things have always been done. For low- and middle-income families around the country, moving into the central region may grow in popularity as a way to reduce their cost of living. Likewise, the industry may look to less common housing options, such as workforce housing and single-family home rentals.

While the solution isn’t immediately clear, financial institutions, developers and local governments must continue to work together to create affordable housing for communities across the country.


1 U.S. Census Bureau and U.S. Department of Housing and Urban Development, Housing Starts in Midwest Census Region [HOUSTMW], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/HOUSTMW, August 13, 2020.

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