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 leave a rating and review to let others know about the work we're doing. For more from the Congressional Watchdog, the U.S. Government Accountability Office, visit us at gao.gov. [ Music ]