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How the pandemic drove rents higher and made housing inequality worse

The pandemic uprooted thousands of people, leaving a glut of luxury apartments available in cities at the same time it undercut the earning potential of renters in the middle class. Due to the economic pressure of eviction moratoriums coupled with illegal housing practices, many are finding few options for safe, affordable housing. Special correspondent Catherine Rampell reports.

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  • Judy Woodruff:

    At the start of the pandemic, rents for luxury apartments in big cities plunged, with landlords slashing prices by hundreds or even thousands of dollars, and throwing in free amenities and perks.

    But around much of the country, rents for lower-income apartments stayed the same or rose higher, exacerbating inequality.

    Special correspondent and Washington Post columnist Catherine Rampell has the story.

  • Catherine Rampell:

    Brett Vergara is up in the clouds.

  • Brett Vergara:

    Yes, it's pretty dang magical, I would say.

  • Catherine Rampell:

    He just got the Brooklyn apartment of his dreams, after all.

  • Brett Vergara:

    You got World Trade over there, Empire State Building, all the bridges.

  • Catherine Rampell:

    It's a huge upgrade from where he lived before, says his mom, Katherine Starr, visiting from Syracuse.

  • Katherine Starr:

    I remember the first time bringing him down here and dropping him off at his first basement apartment with bars on the walls in a tiny little 8-by-10 room. And I'm like, why do you love New York City so much?

  • Brett Vergara:

    I look out here and feel lucky and humbled and grateful, to say the least.

  • Catherine Rampell:

    He feels lucky because he got this 49th-floor view for a bargain-basement price.

    Economist Nancy Wu, StreetEasy and Zillow: Rents have been dropping significantly, especially in really dense urban areas such as New York City and San Francisco.

  • Catherine Rampell:

    Nancy Wu, economist at real estate sites Zillow and StreetEasy.

  • Nancy Wu:

    The biggest discounts are in some of the most expensive neighborhoods, and anywhere up to five months of free rent.

  • Brett Vergara:

    I was stalking StreetEasy looking at like the listing history. And I was like, OK, this is going to be home. It's just a matter of when.

  • Catherine Rampell:

    Vergara, a tech worker, first zeroed in on the building in August, when he was still renting a place with three roommates. The apartment was posted in October for $3,000, nearly $1,000 less than what it had rented for pre-pandemic. He then watched the price fall almost daily for three months.

  • Brett Vergara:

    Then just swooped in.

  • Catherine Rampell:

    In the end…

  • Brett Vergara:

    It's like $2, 650-ish, two-and-a-half months free.

  • Catherine Rampell:

    So that's a pretty deep discount.

  • Brett Vergara:

    Yes. Even in my dreams — like, theoretically, dreams don't have restrictions, right? Did not dream of this.

  • Catherine Rampell:

    But not everyone is getting a great deal.

  • Faye Porter:

    When I started, my rent was $900. It is now $1, 500.

  • Man:

    That ain't right.

  • Catherine Rampell:

    Faye Porter is a tenant organizer in Chicago and a paralegal who lost her job during the pandemic. She's been fighting rent increases for a decade now, including a $70 hike last June.

  • Faye Porter:

    This is how I have to heat my apartment in the wintertime.

  • Catherine Rampell:

    While she's watched her living conditions deteriorate.

  • Faye Porter:

    Plumbing issues, electrical issues. I have had a fire in my apartment, a gas leak. Our carpet hasn't been cleaned at least in two years, and it's never vacuumed. The building smells bad, so this is what I have to do.

  • Catherine Rampell:

    Tell me more about the heat. That's been a chronic problem, right?

  • Faye Porter:

    Definitely. Last year was the worst.

    This is the ice inside my bathroom window.

  • Catherine Rampell:

    These are the portable heaters she had to buy.

  • Faye Porter:

    I had to get five to make sure that the apartment stays warm to some degree.

  • Catherine Rampell:

    So those sound like pretty substandard conditions.

    (LAUGHTER)

  • Faye Porter:

    Yes.

  • Catherine Rampell:

    How come Brett Vergara scores a great deal in a luxury apartment, and Faye Porter can't catch a break?

  • Faye Porter:

    People get stuck in here too.

  • Jenny Schuetz, Brookings Institution:

    The K-shaped recovery that's been present in labor markets is also showing up in housing markets.

  • Catherine Rampell:

    Economist Jenny Schuetz means the two-track recovery, where the rich get richer and the poor get left behind.

  • Jenny Schuetz:

    So, higher income renters who still kept their job, who have strong credit scores and have some assets have taken advantage of low interest rates in this time to become first-time homeowners.

  • Catherine Rampell:

    Many decamped to the suburbs or beyond, leaving a lot of vacant luxury rentals behind.

  • Jenny Schuetz:

    But, at the same time, low-income renters who have had job losses and income losses and really don't have a lot of choices about where to live, they're actually seeing somewhat higher rents at the low end of the rental sector.

  • Catherine Rampell:

    Because of increased demand for cheaper housing. They're competing with middle-income renters who may also have lost jobs.

  • Jenny Schuetz:

    People who maybe were in a slightly nicer or larger apartment before who are having to downshift or downgrade a little bit.

  • Catherine Rampell:

    Robin Schwartz is one of those down-shifters.

  • Robin Schwartz:

    I had a balcony. I had a dishwasher. I had the washer-dryer. And I had a really decent sized rooms that you could walk around in.

  • Catherine Rampell:

    A health and lifestyle coach in Chicago, Schwartz's business dried up last year. She wanted to move, but she was struggling with long-haul COVID.

  • Robin Schwartz:

    I had terrible, terrible difficulty breathing. I still have difficulty breathing, like now, and the fatigue and the brain fog, the coughing and the racing heart. And feeling that way, to have to go try to find another apartment was a bit of a nightmare.

  • Catherine Rampell:

    Was it difficult to find a place that was within your budget?

  • Robin Schwartz:

    Yes. In fact, what ended up happening was the prices began to rise, so where I'd started looking at one-bedrooms, as a couple of months passed, they were charging for a studio what they had been charging for one-bedroom.

  • Catherine Rampell:

    She ended up taking a studio about half the size of her old apartment, and with none of the perks.

    Have you been monitoring what's happened to your old apartment?

  • Robin Schwartz:

    The price dropped enormously after I moved out to like $1, 550 or something?

  • Catherine Rampell:

    Down from about $2,000. Even though high-end units like her old place are getting cheaper…

  • Faye Porter:

    The windows don't fit properly.

  • Catherine Rampell:

    … they're still out of reach for many low-income tenants. The wait list for financial assistance is long and offers no guarantees.

    You have probably seen that, in lots of neighborhoods where the rental prices are higher, they have been falling.

  • Faye Porter:

    I have seen rents go from $3,000 to $1, 500.

  • Catherine Rampell:

    That's her current rent.

  • Faye Porter:

    Some of the places are wonderful. I have looked at them. There's this particular loft. I wanted it so bad. He said, I had it, until I said I had a housing choice voucher. And it was over, because of preconceived notions that, if you have a Section 8 tenant, then drugs is going to come with them, some unsupervised children, they're not going to keep their house clean, and, also, they're people of color.

    I have had that happen to me at least 20 times.

  • Catherine Rampell:

    Illegal, but all too common, and one reason why the high-end rent cuts haven't yet filtered down to the neediest.

  • Nancy Wu:

    It's not helping the people who don't have vouchers in the first place or people who are still facing pushback from landlords from taking their vouchers. So, these are bigger problems that still need to be addressed.

  • Catherine Rampell:

    Other policies intended to help distressed tenants may also have some unintended consequences for rents.

  • Jenny Schuetz:

    Landlords may be trying to sort of balance out the overall building income, given that some of the tenants in there aren't able to pay. But, because of the eviction moratorium, they're still in there.

    So they're losing income on some of the units. And they may be trying to make that up by raising rents on tenants who still have jobs and can afford to pay.

  • Catherine Rampell:

    And many landlords have little wiggle room.

  • Jenny Schuetz:

    Rents at the low end kind of have a floor, based on just the cost of utilities and the mortgage and property taxes and so forth. So you can't have much softening.

  • Caitlin Walter, National Multifamily Housing Council:

    We just don't have enough affordable rental housing in this country, is the big problem.

  • Catherine Rampell:

    Caitlin Walter, National Multifamily Housing Council.

  • Caitlin Walter:

    We say that you need to build about 325,000 apartment units every year in order to keep up with just that year's demand. And there were many, many years, almost a decade, where we didn't meet that annual demand.

  • Catherine Rampell:

    So there's been a glut of units at the high end, though prices there are rising again, as superstar cities reopen.

  • Brett Vergara:

    I would say this past year, to sum it up, is like guilty gratitude, where I feel like I got away with something here.

  • Catherine Rampell:

    While those hit hardest by the pandemic…

  • Robin Schwartz:

    This has been really hard.

  • Catherine Rampell:

    … feel like they're being left behind.

  • Robin Schwartz:

    And the unfairness has been especially upsetting.

  • Faye Porter:

    It angers me. It's a fight every day to deal with the housing situation. And, sometimes, I'm tired. Everybody gets tired of fighting.

    The only way we can fight this is to get organized.

  • Catherine Rampell:

    But fight she does, starting with her next rent increase, another $50 a month.

  • Faye Porter:

    Because we all need and deserve a safe, clean, decent, affordable place to live.

    (CHEERING AND APPLAUSE)

  • Catherine Rampell:

    For the "PBS NewsHour, " I'm Catherine Rampell.

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