2022: A Bad Year for Housing Security in America

By many measures, 2022 was a very bad year for housing security in the United States. Although no one tracks housing security in a comprehensive or uniform way, assessing some of the available housing metrics that impact housing security can begin to paint a picture.

Despite signs that the housing market is cooling in recent months and house prices are dropping, the actual cost of homeownership has soared as a result of rising mortgage rates. According to the National Association of Realtors, mortgage interest rates more than doubled in the last year, rising from 3.1 percent in October 2021 to 7 percent in October 2022.

While the median price for a single family home only rose by $20,000 in the last year, from $362,600 to $384,600, the median monthly mortgage payment nearly doubled, from $1,242 to $2,044. In the West, median mortgage payments jumped to $3,207 a month, and in the Northeast to $4,216 a month.

Increasing mortgage rates also steeply increased the required threshold to qualify for a loan, from a qualifying income of $60,000 in 2021 to $98,000 in 2022.

A standard rule of thumb in the mortgage industry is the ‘28 percent rule,’ meaning that housing expenses, including mortgage, property taxes, and insurance, should not exceed 28 percent of a purchaser’s monthly income.

However, a recent report by the real estate research firm ATTOM found that at the end of 2022, housing expenses were eating up 32.3 percent of purchasers’ income on average. This is the highest level since 2007, and a significant increase over the rate at the end of 2021 of 23.8 percent.

Rents also continued to surge, increasing 7.4 percent nationwide between November 2021 and November 2022, according to Redfin. This increase is on the heels of a whopping 13.5 percent year-over-year uptick from 2020 to 2021. Many cities saw increases well above the 7.4 percent level, including Raleigh (21.8 percent), Nashville (14.8 percent), San Diego (9.2 percent) and Miami (9.2 percent).

As a result, in May 2022 the median monthly asking rent exceeded $2,000 for the first time in history. As of November 2022, some of the highest rents are in large cities, such as New York ($4,010), Boston ($3,628), Los Angeles ($3,412), and Miami ($3,268). But even smaller cities in the South, traditionally considered more affordable, now exceed this threshold, including Orlando ($2,084) and Tampa ($2,100).

An October 2022 survey by the U.S. Census Bureau found that more than 31 million tenants experienced a rent increase over the past year, with over 2.5 million people experiencing a rent increase of more than $500. These rent increases come at a time when pandemic-era eviction moratoriums have lapsed, and federal Emergency Rental Assistance Program (ERAP) funds are depleted. By November 2022, the Treasury Department estimated that less than $7 billion out of a total of $46.5 billion in ERAP funding remained available.

As a result, eviction filings have now reached or surpassed pre-pandemic levels in many areas, though the lack of federal-level eviction data tracking makes it difficult to get an accurate understanding nationwide. From Texas’ cities Houston, Dallas and Fort Worth, where landlords filed more than 37,000 evictions in the first quarter of 2022, to at least a 67 percent increase in eviction filings over the previous year in Maricopa County, Arizona, eviction filings are surpassing their pre-pandemic levels in many cities, counties, and states across the country.

Indeed, Legal Services Corp, a federally-funded legal aid group, found that eviction filings are above the historical average in half of the 1,059 counties they track.

After a two-year lull, U.S. foreclosure activity has surged. Foreclosure filings are the first stage in the process of a lender repossessing a home for failure to make mortgage payments, and a key indicator of housing security. According to ATTOM, foreclosure filings increased 167 percent between October 2021 and October 2022, nearly reaching pre-pandemic levels.

The COVID-era federal foreclosure moratorium, included in the CARES Act, expired in July 2021. Though a few localities kept projections in place after that date, nearly all of these have now lapsed.

What’s more, homeowners unable to make mortgage payments may be selling their homes prior to foreclosure, in order to leverage the equity they have in their homes. Indeed, very few properties under foreclosure have been returned to the lender. Not only do these ‘involuntary sales’ conceal the extent of housing loss via foreclosures, but they can also result in homeowners losing their existing home and then trying to find housing in a market characterized by higher housing costs.

How do we turn things around moving forward? Mortgage interest rates will likely continue climbing, and there’s little hope that inflation will abate. But clever policies, especially at the local level, can help keep more people housed, even in light of these macro trends.

The Biden administration recently released a “Blueprint for a Renters Bill of Rights” designed to help renters stay in their homes. Though the White House initiative is non-binding, it does elevate the dire need to address rising rents and enact tenant protections to the national level and also lays the groundwork for future federal action. For now, however, action at the local and state level is likely the only means to slow further deterioration of housing security in the United States.