Housing Market Pressures and Displacement: A Conversation with Berkeley's Tim Thomas

The intersection of housing affordability, displacement, and market dynamics is creating unprecedented pressures across the American housing landscape, according to Dr. Tim Thomas, Research Training Lead at Berkeley’s Urban Displacement Project. His research paints a concerning picture of mounting challenges that real estate professionals and investors should be watching closely.

“We’re seeing a fundamental shift in the population that’s been slowly boiling,” Thomas explains, pointing to a growing misalignment between wage growth and rent increases. This disparity is pushing previously stable households into financially precarious situations, particularly affecting those at 50-80% of area median income (AMI).

The dynamics at play are complex and interconnected. “You don’t throw a frog in a boiling pot,” Thomas notes, describing how these changes have gradually accelerated. “What’s creating is kind of a vacuum of sucking a lot of people into populations of poverty that they’ve not been in that position before.”

This shift is particularly evident in the struggles of middle-income households. Service industry workers with college degrees, high-end retail employees, and other traditionally stable professional sectors are finding themselves in unfamiliar financial territory. “These folks were maybe paycheck to paycheck, had a little bit of savings, but now they were just depleted,” Thomas explains.

The pandemic served as a catalyst, amplifying existing pressures. When employment stopped for many workers, especially in the service sector, it revealed the fragility of many households’ financial situations. This was compounded by other factors: health crises leading to medical debt, the inability of millennials to transition into homeownership, and a severe housing shortage that keeps upward pressure on both rental rates and home prices.

Market Dynamics at Play

According to Thomas, the current market presents a complex set of interconnected challenges. “You have a housing shortage as well,” he explains. “You have a lot of people buying up properties, so there’s fewer properties that are available to purchase… supply and demand, so the cost of housing is much higher.”

This supply constraint is having cascading effects across the housing ecosystem. “Millennials are staying in the rental space because they can’t move into this next phase of their life,” Thomas notes, describing how barriers to homeownership are keeping potential buyers in the rental market longer than previous generations.

Perhaps most concerning, Thomas points to an unusual market dynamic where vacancy rates are rising without the expected corresponding drop in rental rates. “We’re maintaining these high rates of rent,” he explains, citing Marin County as an example where vacancy rates have reached 6.5%. “Anytime you get above 5% your rent should be going down. But they’ve stayed high.”

The market is also seeing a structural shift in ownership patterns. “More companies are buying up rental properties, and so your ‘Mom and Pop’ is disappearing,” Thomas observes. He attributes this partly to the increasing capital requirements for individual investors: “For me to become a mom and pop, I would need some massive capital.” This shift toward corporate ownership has implications for how properties are managed and how evictions are handled. According to Thomas, these larger organizations “are more organized at evicting. So they evict more. They also apply more for rental assistance, but it’s a pretty impersonal engagement that happens between the tenant and the landlord.”

Thomas’s research has revealed particularly stark disparities in eviction rates. In Washington state, for example, Black women face eviction rates seven times higher than white women, while Black households overall are evicted at four times the rate of white households. These disparities persist even when controlling for income levels.

Market Indicators and Investment Implications

For real estate investors and property managers, Thomas highlights several important market indicators to watch. The increasing bifurcation of the market and erosion of the middle class could impact the stability of rental income streams. “We’re seeing too many similarities to 2007 right now,” Thomas warns, suggesting that investors should prepare for potential market adjustments.

This shifting landscape is particularly evident in urban markets. Using San Francisco as an example, Thomas notes how the market has evolved: “The Bay Area had the number one highest rental market around through $3,200, dropped down to $2,400 almost losing $1,000 in market value by 2021… then it jumped up to about $2,800, it went from first to fourth place.”

Policy Evolution and Market Response

Policy responses are evolving at both local and federal levels. Some of the most effective approaches Thomas has observed include:

• Expanded legal representation for tenants (achieving 83% success rates in securing permanent housing in Washington state)
• Rental assistance programs benefiting both landlords and tenants
• Just cause eviction requirements
• Strengthened tenant protections

For property managers and investors, Thomas emphasizes the importance of understanding these emerging policies and their implications for portfolio management. The shift toward more corporate ownership of rental properties has already begun changing eviction patterns and landlord-tenant relationships.

Looking Ahead

Looking ahead, Thomas predicts continued pressure on housing affordability and increasing rates of housing insecurity. “The reliable sources of income for housing are eroding a little bit,” he notes, suggesting that property owners and managers may need to adapt their strategies to navigate these changes.

This evolving landscape presents both challenges and opportunities for real estate professionals. Understanding these demographic and economic shifts will be crucial for making informed investment and management decisions in the coming years.

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About Tim Thomas

Tim Thomas serves as Research Training Lead at Berkeley’s Computational Social Science Training Program and is affiliated with the Urban Displacement Project. His research focuses on neighborhood change, housing disparities, and displacement effects on household socioeconomic mobility. Thomas’s work has influenced policy at both state and federal levels, including informing the CDC eviction moratorium extension during the pandemic and advising the White House and HUD on national eviction trends.