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Why a ban on eviction alone cannot prevent a housing crisis



As an eviction crisis became more likely this summer, everyone in the real estate market made the same request to Washington: send money – lots of it – to keep tenants in their homes and landlords afloat.

City officials have called for such rent relief. So are landlords’ associations, tenant attorneys, legal aid lawyers, housing researchers, public health experts and economists.

Now millions of tenants are facing a national eviction moratorium, an unprecedented arrangement of the Centers for Disease Control and Prevention to fight the coronavirus pandemic. But there is still no money.

Congress has not yet passed a new aid package that includes comprehensive rent relief. There has been no other financial aid recently either. The extended $ 600 per week unemployment benefit expired in late July, along with a limited eviction moratorium. No new stimulus tests were performed. And additional unemployment benefits created through actions by President Trump have not yet reached many workers.

That said, while the new order stopped most evictions by the end of the year, there is no mechanism to cover what these tenants can’t pay for – or to control the cascading consequences when the rent dries up.

Tenants will still be on the hook for all of these unpaid rents after the moratorium expires on December 31st. In the meantime, landlords may find it increasingly difficult to make repairs and cover the mortgage. Because of this, even proponents who cheer the moratorium call it half a measure. And landlord groups warn that this could destabilize the real estate market even more.

“We’re not comfortable with a lengthy moratorium because we just can’t agree that this is the answer,” said Greg Brown, senior vice president of government affairs for the National Apartment Association. “We think that rental support in and of itself is the answer. That said, if this is the approach that is being taken, then it is imperative that it be linked to rental support. “

If this wasn’t clear to Congress a week or a month ago, when the sweeping talks over coronavirus relief efforts collapsed in Washington, officials could soon be hearing from distressed landlords.

“We needed a major external event to change the status quo of the negotiations,” said Brown. “And maybe this is the event.”

The Rent Stabilization Association, which represents 25,000 landlords in New York City, described the moratorium on Wednesday as a form of “pandemic policy” at their expense.

The American Action Forum, a right-wing political group, described the moratorium as a humane response, but also as a “delaying tactic” for the housing crisis without accompanying financial support.

A major stimulus package passed by the Democratically-controlled House in May included $ 100 billion in such support, which was to be channeled through an existing subsidy program from the Department of Housing and Urban Development. But that law was not passed by the Senate. And rent assistance is a less important priority in negotiating a new aid package, as Democrats and the White House have argued over the total cost, unemployment benefits, and aid to state and local governments of the law.

Now that the moratorium is in place, the impact on landlords may not be immediately apparent. Many property owners are used to vacancies and the occasional months with no rent payments (and those who vacate renters during more normal times can often expect the process to take months). However, the researchers warn that the burden will increase, especially among the small landlords who own some units and count on that income for their retirement.

“Some of them won’t make it,” said Jenny Schuetz, city economist at the Brookings Institution. “It’s the real estate equivalent of a small family business.”

These small rental properties, which are often older and have higher maintenance costs, tend to be lower-income apartments than newer company-run apartments. If owners can’t keep paying their bills, these properties could be put up for sale or foreclosed.

Should private equity firms buy them – as they did with many single-family homes during the Great Recession – rental properties, which are now relatively affordable, may become fewer.

Abigail Staudt, an attorney with the Legal Aid Society in Cleveland, said the moratorium with no rental support is not a permanent solution for renters and would be a hardship for small landlords.

“And those who offer affordable housing – it is often the small landlord,” she said.

What might happen next won’t be as visible as the unemployment crisis reported in weekly and monthly national data. It won’t be easy to keep track of in the real estate market. Multi-family transactions are less transparent than the sale of single-family houses. And it won’t be as clear as when families queue up at food banks, said Ms. Schütz. Most families in need of shelter never show up in temporary shelters looking for shelter.

“It’s not that everyone is fine one day and everything is terrible the next day,” said Peggy Bailey, vice president of housing at the Center for Budget and Political Priorities. However, she warned that the lack of rental support would make it difficult for tenants and landlords to recover from the economic crisis over time.

“We’re just asking people to stay farther back and spend their savings and do all sorts of things that have a longer-term impact than just the next six months,” she said.


Matthew Goldstein contributed to the coverage.


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