COVID-19 and California’s housing crisis: 5 issues to watch

A hand-sanitizing station at a homeless encampment near Oakland city hall. Photo by Anne Wernikoff for CalMatters. | 

By Matt Levin, CalMatters |

Less than two weeks ago, Gov. Gavin Newsom and California lawmakers were in the throes of tackling the twin issues voters considered the state’s most urgent concerns: the more than 150,000 Californians without a home and the state’s sky-high housing costs. 

Legislators were introducing controversial bills to make it easier for developers to build more housing, hoping to ease the crippling shortage economists say have made rents and home prices among the most expensive in the country. Newsom and local governments were about to square off over how to spend $1 billion in proposed help for the unhoused.

That feels like eons ago. As the COVID-19 pandemic forces millions of Californians to adjust to a new reality, the state’s “housing crisis” already means something different, provoking previously unthinkable questions: 

How do you shelter in place without a home? How do you self-isolate in an overcrowded apartment? How far would a $1,000 stimulus check from the federal government go toward my rent or mortgage payment? 

Here are five rapidly evolving housing issues to watch in the next few weeks, months and, yes, years. 

Issue 1: The state’s housing crisis makes it harder to respond to COVID-19

First, there’s the obvious: how to protect the more than 150,000 homeless Californians from contracting and spreading the virus. 

It’s worth reiterating here that the counts you’re hearing from state officials — 108,000 people sleeping outdoors, 43,000 in shelters — are major underestimates. Not only are those numbers more than a year old, but counting the homeless is an inherently unscientific and imprecise snapshot in time. That means more emergency housing units, money and supplies will be needed than what the official stats might indicate.  

It’s also worth reiterating that other states don’t have to worry as much about this vulnerable population as California, which has the highest number of homeless residents in the country and by far the most living outdoors. Many of those homeless are seniors who have chronic health conditions and are particularly susceptible to COVID-19. 

But there are other dimensions of the housing crisis that are making it tougher for public health authorities here to manage the pandemic. Mostly because it’s so expensive to live here, California is the worst state in the country when it comes to overcrowded housing. 

That presents complications for millions of Californians instructed to stay indoors, especially if a household member is showing symptoms of COVID-19. The Centers for Disease Control and Prevention has recommended that someone who is symptomatic should self-isolate in a “sick room” with a separate bathroom. That may not be an option. 

While the virus presents the most pressing public health risk, researchers are also concerned about the long-term physical and health effects of overcrowding if schools and workplaces remain closed for extended periods. 

“On a daily basis, people are experiencing the crowdedness of their homes for longer periods of time throughout the day,’ said Claudia Solari, who researches housing overcrowding at the Urban Institute. “That kind of longer exposure could be a problem.” 

Solari’s research finds overcrowding can be linked to physical and behavioral problems in children. 

Issue 2: Housing the unhoused amid a pandemic takes an extraordinary — and extraordinarily complicated — effort 

Newsom and local governments have announced unprecedented efforts to get people living outside to move indoors. 

The state released $100 million to local governments for emergency shelter housing, with more likely on the way; purchased more than 1,300 trailers from the Federal Emergency Management Agency to isolate homeless people who are symptomatic; and offered to negotiate leases with more 950 hotels on behalf of counties to get more people off the streets. Two hotels have already been secured in Oakland, providing 393 rooms.

The city of Los Angeles, with the largest homeless population in the state, announced today it would convert 42 city recreation centers to emergency shelters to create 6,000 new beds. 

But as sweeping as many of these actions have been, including many long sought by advocates, the task ahead is daunting and raises tough questions for public health experts and providers of services for the homeless.

“Health and healthcare are impossible to do with homelessness, they’re incompatible,” said Dr. Margot Kushel, a UCSF homelessness researcher.

Kushel points to several difficult-to-manage scenarios that may play out in coming weeks: How to discharge someone from a hospital if they don’t have a home in which to self-isolate? How to immediately house people with substance-abuse disorders without risking their health (an alcoholic could die if immediately cut off from alcohol, for example)? What to do with an encampment if someone starts coughing and running a fever? 

That last question could be especially problematic. Kushel pushes back against the notion that large-scale sweeps may be necessary, arguing that dispersing an encampment would be an even larger public health risk. But she worries that contagion could be a pretext for governments to sweep people off the streets, especially for the Trump administration, which has threatened such action before. 

State models show that 60,000 people who are homeless could be infected by the virus, with up to 20% needing hospitalization. 

Issue 3: Renters and mortgage-holders need lots of help

“I think it’s a huge number,”said Carol Galante, director of the Terner Center for Housing Innovation at UC Berkeley. 

Galante was a high-ranking official in the Department of Housing and Urban Development from 2009 to 2014, as the Obama administration wrestled with the Great Recession. 

Galante said she could easily see this crisis become worse for renters and homeowners with mortgages unless bolder action is taken by the federal and state governments — especially for Californians. 

One simple example: the $1,000 stimulus check some federal lawmakers are pushing for all Americans. That could pretty much cover your rent for the average one-bedroom apartment in Phoenix or Dallas or Atlanta. It would cover less than half of what a one-bedroom costs in San Francisco. 

“I keep thinking of all the people whose incomes have just gone to zero,” said Galante. “Hairdressers, waiters, waitresses — they can’t pay their rent.” 

Newsom has received a flood of criticism from tenant-rights groups for not doing enough to prevent evictions in the wake of the pandemic. An executive order the governor issued this week simply allows local governments to impose an eviction moratorium — if they want to. In places that have imposed a moratorium, renters would have to demonstrate financial harm from the coronavirus crisis to avoid eviction. 

The Trump administration announced a moratorium on foreclosures and evictions for federally backed mortgages on single-family homes. That would not apply to the vast majority of renters. 

Issue 4: Rents and home prices may dip, but that’s not necessarily good news 

Economists are saying the country is likely already in recession, and only the depth and breadth of a downturn are uncertain at this point. The worst-case scenarios — 20% unemployment, widespread layoffs over a prolonged period — are terrifying. Early indications are that jobless claims are reaching record levels already. 

In most recessions, home prices and rents decline alongside falling incomes and wages. If a COVID-19-induced downturn is brief and the economy rebounds like President Trump has predicted, rents and home prices might only dip temporarily. But the possibility of a prolonged drop in housing costs is real. 

Some might see a paradoxical benefit for Californians. Wasn’t the root of the “housing crisis” the fact that rents were too damn high? If housing prices drop, won’t more people be able to buy a house?  

Not really. 

A rapid decline in rents and home values might be beneficial to Californians who can keep steady incomes and stable jobs. But for lower-income earners, especially in the service sector, rents will not drop as fast as their incomes. The state will be more unaffordable, not less. 

Issue 5: If momentum for new home building dries up, trouble lies ahead

If California does enter a prolonged recession, its political leaders may want to look back to the 2010’s for a lesson in what policymakers shouldn’t do. 

While the rest of the economy picked up steam after the Great Recession, homebuilding did not — particularly in places like the Bay Area, which saw an explosion in high-wage jobs. Meanwhile, the state only incrementally replaced funding for government-subsidized low-income housing programs it had slashed during the downturn. 

The result? The housing crisis we were living in before COVID-19 hit: sky-high rents, declining homeownership, widespread gentrification and displacement and rising homelessness. 

Galante, the former HUD official, fears that policymakers may make the same mistakes, just as things like affordable housing funding and zoning reform were finally at the top of the agenda. 

“I think we need to be preparing and thinking about that recovery today, and part of that means doing the hard things,” she said. 

Those hard things? Spending more on low-income housing even if state coffers start to bleed, and reducing the regulations developers face when trying to build. 

CalMatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.