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15 Journal MORE RENTERS SEEKING WARMER, RURAL AREAS Out-of-state applicants for rental properties increased 42% from 2020 to 2021, according to a new data analysis from TransUnion. In that same period, rental applications in rural areas increased 28%, while urban rental application volume rose just 10%. e primary driver of these trends appears to be rising housing costs and the widespread availability of remote work, which began during the COVID-19 pandemic. "With remote work firmly in the norm, we've seen renters actively seeking new locations that better suit their budgets and lifestyles," said Maitri Johnson, VP of Tenant and Employment Screening at TransUnion. "While many are going out- of-state to sunnier environments, we're also seeing a preference for rural areas and exurbs that have more space and a lower cost of living, but also a relative proximity to cities and airports." Texas saw the largest increase between 2020 and 2021, with more than 310,000 new residents. Meanwhile, New York had the highest decrease, losing more than 319,000 residents. Generally, the cross-state migration patterns show more people leaving the Rust Belt and Northeast in favor of the Southern Atlantic and Mountain states, as well as Arizona and Texas. Overall occupancy of U.S. rentals reached a record 98% in January 2022. is may have been driven in part by an influx of homeowners who capitalized on their home equity by selling while housing prices were at an all-time high and renting until valuations come back down. When looking at rental applications from 2020-2021, there was a 37% increase in applicants who had sold their home within the past year and a 16% increase among applicants with an outstanding mortgage. e higher costs for home purchases simultaneously kept many younger adults from becoming first-time homebuyers. However, the same inflationary trends have impacted affordability in the rental market as well. Rent prices increased 14% between 2020 and 2021 while the median income of applicants has only increased 6% over that same time. Predictably, delinquencies on rent payments have increased. Whereas on- time rent payments were at 96% in January 2020, they had dropped to 92% at the end of 2021. "Demand is clearly very strong right now, which is all the more reason for a thorough rental application screening process with an emphasis on income and debt ratios and their effect on affordability," Johnson said. ere are signs that the housing market is cooling down as the Fed has bumped up interest rates several times already this year, which means renters can expect to continue renting until economic stability is regained. TransUnion analysis suggests immigrants may well sustain the rental market's high demand over the long term. Citing data from the U.S. Census Bureau and Joint Centers for Housing Studies of Harvard University, the report provides highlights about this population's participation in the rental market. In 2022, immigrants represent more than 14% of the total U.S. population. at percentage is expected to grow through 2060, when the U.S. Census Bureau projects immigrants to represent 17% of the nation's population. "Because people who immigrate to the U.S. tend to remain renters for long periods, there is likely a compounding effect to this sustained increase," Johnson said. "e current demand resulting from the housing market may subside as home prices come down, but this population will likely keep rental demand elevated over the coming decades." homes, policies that explicitly push this idea encourage urban sprawl at the expense of higher density living. ese harmful effects are disproportionately borne by communities of color, which compound existing inequities. "In addition, a third of all homes in the U.S. are considered to be at high risk of damage from natural disasters, and communities of color bear the brunt of this damage," the Urban Institute said. "One study analyzing changes in household wealth in counties with high damage from natural disasters found that white households experienced an increase in wealth of $126,000 on average over a 14-year period, while Black and Latinx households experienced an average loss of $27,000 and $29,000." "e emerging practice of "bluelining"— drawing arbitrary lending boundaries around neighborhoods perceived to have increased environmental risk (which often coincides with previously redlined neighborhoods)— threatens to further depress home values in neighborhoods of color and suggests that focusing only on subsidizing homeownership for wealth building is also unsustainable in the longer term." So, what can be done? e Biden administration is addressing some aspects of the racial wealth gap and creating policy to expand access to homeownership such as by tackling the appraisal bias and promoting small-business ownership. But more can always be done, the Urban Institute said. Beyond ensuring that households of color have equal access to homeownership and its benefits, some additional strategies that policymakers at all levels could consider include the following: » Implementing high and progressive taxes on inheritances and wealth » Providing reparations to the descendants of enslaved Black Americans » Implementing baby bonds, which would provide every child with a publicly funded trust account at birth » Reducing personal and household debt, including by canceling student loan debt for qualifying households and reducing punitive fines and fees » Increasing access to retirement savings plans and matched savings accounts » Boosting household cash flows by reducing income inequities and providing protection against extraordinary shocks

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