The Return on Investment of Pandemic Rental Assistance: Modeling a Rare Win-Win-Win

Abstract

We are facing an eviction crisis. The COVID-19 pandemic, has sent our economy into a tailspin forcing countless Americans to choose between feeding their families or having a roof over their heads. Many low-income people, especially low-income people of color, are facing an unprecedented economic crisis with tremendous rates of wage reductions and job loss. This has resulted in millions of Americans being unable to pay their full rents, creating the legal grounds for their landlords to evict them. As of early December 2020, more than 19 million individuals lived in households behind on rent, and more than 30 million did not believe they could make next month’s rent payments on time. For renters who are facing eviction and their landlords, the unpaid bills are piling up. Scholars, policymakers, and advocates have increasingly focused on a number of solutions to the eviction crisis including eviction moratoria and rental assistance, concluding that these solutions can stabilize households, especially when combined. Yet, the refrain is almost always that investing in national rental assistance programs will be expensive. However, few analysts have emphasized the financial costs of inaction. This paper presents an analysis that estimates the Return on Investment (ROI) of a number of different pandemic-related rental assistance programs by comparing the costs of rental assistance with the social costs of homelessness and displacement. As seen in Figure 1, this piece finds that rental assistance has a positive ROI of between 229%-473%. These ROI values point to the conclusion that failing to invest in rental assistance will cost dramatically more than making the investment now. The ROI analysis finds that rental assistance stabilizes both tenants and landlords, preserves neighborhoods, and protects government budgets over the long-term. More broadly the returns on rental assistance argue for a re-imagination of the eviction system. The conclusion that the estimated benefits of rental assistance eclipse the estimated costs of providing the funds by three or four times, suggests that rental assistance should supplant eviction as the social remedy for the inability to pay rent. In other words, keeping people in their homes during this pandemic and beyond is not only the right thing to do, economically it is the smart thing to do.