There was no moratorium on paying mortgages and a lot of people have made huge sacrifices in order to hang onto their properties in the last 14 months.
But I doubt most of them are really "crippled" in light of crazy price appreciation on the other hand. They might be forced to sell due to cash flow problems (immediate cause of most business failures anyway, no?), but should still be in the plus after the sale goes through.
Governments that do such things tend to have very poor economies as a result, as very few businesses are willing to undertake such risks.
Not allowing an owner to exercise all of his rights of ownership is a taking, even if it's not permanent.
You see this often with construction projects that expropriate not only the title to land needed, but also temporary servitudes (leases) on adjacent land for site access or extra room for construction.
Point being, the "temporary" nature of the order, and the fact that the landlord retains title/ ownership, doesn't preclude it from being an (un)constitutional "taking" of private property.
See, e.g., https://www.inversecondemnation.com/files/eviction-moratoriu... (massachusetts)
(A federal court also declined to block it)
I am too lazy to look at all of them.
The reason they are usually found not to be takings is twofold.
First, they only prevent a specific type of relief. In most of them, nothing in them stops the landlord from suing for money damages, or even necessarily for breach of contract with ejection as a remedy. They only usually prevent you from filing eviction petitions.
Second, they generally do not state that you are not owed the money, only that you may not temporarily collect it.
https://www.law.cornell.edu/wex/takings goes through most of the current tests, and most moratorium rules fail them.
For example, taking again the MA one:
1. It does not allow permanent physical occupation (they are temporary)
2. It does not cause loss of all beneficial/productive uses of the land (you are still owed the money, and in fact can sue for money damages)
etc
To my mind, if the government suddenly refuses to evict anyone for public health reasons, the taking of intangible property rights is minimal, non-discriminatory and justified. We’re at war with a virus here, some sacrifices will have to be made. If people can be evicted, more people will die than if they stay put.
It's not that the judge needs to step in to decide whether failing to pay rent should result in eviction. It's that you can't forcibly evict someone as an individual (because forcible eviction can go nasty, from either party, very quickly, and historically abused).
You need the judge to determine that it's now time to invoke the police to enact a forcible eviction, because the renter won't leave quietly/on his own.
The judge does not determine whether the renter is qualified to live there despite not owning up to his side of the renter's agreement -- the judge determines whether the use of force is now justified.
>To my mind, if the government suddenly refuses to evict anyone for public health reasons, the taking of intangible property rights is minimal, non-discriminatory and justified.
But that's not the problem at hand. Any reasonable person over the last 1.5 years should have not paid rent, regardless of capability to do so, because the law guaranteed you couldn't be evicted for it (inability to pay was a qualification for the law, but it's hardly trivial to prove it wasn't covid-related). The worst case scenario is you have to pony-up when the moratorium expired (and did you really expect the majority of the population who couldn't pay rent, to suddenly have enough money to cover 1.5 years of rent? The government bailing them out was inevitable -- the alternative is a massive wave of backed-up evictions).
Furthermore, you could barely even evict misbehaving tenants, let alone sufficiently-wealthy-but-not-paying, because the courts assumed it would fall under a covid eviction.
The entire thing was a naively well-intended shitshow.
While not explicitly designed for landlords they technically qualified - even if the only person on payroll is themselves. I know multiple people, albeit in different lines or business, that had 5 to 6 figures of payroll loans forgiven.
The real loser here is the future of the US dollar.
This presumes that the quantity theory of money (and/or the theory of Ricardian equivalence) is correct, which it most likely is not[0]. Money printing does not cause hyper-inflation, as demonstrated in this CATO paper[1]. Governments are not households[2], because they hold monopolies on currency creation[3]. Also, currency creation is not 'debt'.[4]
It follows from this that there is a vast and largely unexplored space on the graph of currency creation over time, where the line can rise before it triggers negative systemic effects. A fiscally sovereign nation can never run out of its own currency.
This policy space is where the future lies, awaiting us. The worldview-assumptions implicit in your question would discourage us from exploring this space. That, in my view, would be the heart of folly.
Many thinking people in the economic and policy professions are realizing this, and not a moment too soon.
0. https://saylordotorg.github.io/text_money-and-banking-v2.0/s... 1. https://www.cato.org/working-paper/world-hyperinflations 2. https://www.youtube.com/watch?v=ba8XdDqZ-Jg 3. https://www.youtube.com/watch?v=1AyT9zftNrE 4. https://www.youtube.com/watch?v=XIe_BiRIlgU
I say "if not someone actively worsening the system" because if you're buying property with the exclusive intention to rent it, there's a decent chance you're just taking available property off the market and contributing to ever-increasing prices, even though the value of the property is kind of just fake number, which increases the need to rent (and be dependent on you) in the first place.
Arbitrary regulation is not the economy.
If CA decides tomorrow to pass a bill that mandates all tech workers to have proper accreditation, including a bar exam, and to fine to oblivion companies that don't comply, is that the economy?
Governments that do such things tend to have excellent economies as a result by preventing a cascade of unneeded financial collapses and the social costs associated with dealing with that along with the increased human suffering of an already significant homeless population.
This is a textbook case of a moral hazard.
If you see someone steal something you shouldn't think you have to steal too because others will have benefit you don't.
It sounds less like moral hazard and more like jealousy. The people who didn't pay took a risk, ruined relationships with management. It will probably follow them around to credit reports and to the next place.
This isn't the situation, though. The situation is more like the government announced that theft of Playstations wouldn't be prosecuted; my friend stole a Playstation, I paid for my Playstation, and at the end of the day the government stepped and paid of my friend's Playstation off for him.
You're totally right that the government isn't punishing me for having paid for my Playstation. But economically I am being penalized for having not stolen my Playstation.
When the responsible thing to do and the economically advantageous thing to do are at odds, it's not far-fetched to expect fewer people doing the responsible thing.
And, no, no one is going to buy your house if it has non-paying tenants that can't be evicted. They would just be inheriting your problem due to tenant's rights.
This would have required ~1 year of reserves, full on, for every unit. Thats a lot to ask if we want a real estate market that is diverse and not feudalistic in nature.
Maybe not for large commercial loans, but traditional mortgages (usually for 1-4 unit properties) absolutely could be deferred for ~1 year if you could show a loss of income from the pandemic.
It is not immediately. This has been going on for a year.
>This is a frustrating thing as someone who saves and has a safety net and other fallbacks in place.
It is one thing to save, but many people are not able to save for a year or more. They may have lost their job AND no longer get any rent money for a year.
Personally I am not opposed to this type of bottom-up bailout, however I think this move should not end up being profit-generating for landlords. Not sure how you'd determine that, etc.
It’s in vogue to harp on landlords, but it’s one of the more common small business models; owning a rental property is probably the most realistic way you or I could earn some income on the side. They’re not all Scrooge McDucks.
'in the future you will not own anything' #WEF https://awealthofcommonsense.com/2021/06/is-blackrock-buying...
Plenty of housing available before blackrock snatches it all up
https://www.zillow.com/homedetails/3723-Bridlewood-Dr-Montgo...
- more traffic since buying and selling a new home takes a lot more effort.
- barrier to moving to a different city with better opportunities / QoL
- lots of capital (most of one's net worth) tied up in a very emotional and personal investment
- incentives that pit their housing investment against things that they might otherwise support, like more housing being built, homeless services, etc
In my experience, landlords are often a pretty toxic element in local politics (opposing upzoning, opposing progressive policies in general.) IME as a renter corporate landlords were not really better or worse than small-time landlords. At least with the corporate landlords, I can buy shares in the company and reap some of the rewards back. Even better, the government could buy shares through a social wealth fund, and return some of the profits to the whole of society.
It also probably pulls wealth out of the local area, depending on where the owners of those larger corporations are.
Why is enforcing legal contracts so important?
Besides being one of the very primal functions of a working government.
I would rather give ~$500 a month in profit to a member of my community, than a national chain. I think it's odd to be against "the rich staying rich" while shrugging your shoulders at corporations throwing their weight around in the rental market.
This is truly a moral hazard. https://en.m.wikipedia.org/wiki/Moral_hazard
You must give a tax refund to anyone that did pay rent fair and square and also prove they paid under duress (paycheck to paycheck or some threshold near it). The only ones that don’t get a refund are those who live in affluent areas, or are well off beyond reason.
https://www.youtube.com/watch?v=TBbXwQTvl_g
It circumvents the moral hazard you mention while alleviating the problems that are impacting all of us.
Landlord are absolutely fine.
A sensible solution 12 months ago would have been to pay renters rent for them directly, but that wouldn't have been as desirable politically.
Housing would also be far cheaper if it wasn’t common to speculate on it, by landlords small and large. It used to be, in fact.
A far more sensible solution would be to outlaw owning a property one doesn’t live in, so housing prices would come down to levels where us renters would be able to buy.
An in-between solution would be massive social housing programmes, so people can rent much more cheaply from a non-profit entity. After all, building housing is a tiny fraction of the cost of housing, the rest is all speculation.
Homeowners speculate too. It would be hard to find someone buying a home who was not considering its future value.
After all, most cities have large numbers of unoccupied homes, owned merely as a financial instrument.
You truly can not determine if you can afford to buy a place until you take a multitude of factors into account, and they vary for each person and each property.
Not to mention, housing has high fixed costs and just isn't available for a lot of people. You need a down payment, various closing costs, proof of decent credit (not just that you haven't defaulted on a loan, but that you've been actively building credit), and ofttimes proof of some moderately high amount of income or sustained bank balance. Even with enough income to make the monthly payments you could still have to save and plan for years to get over the hump of actually buying a home.
Once you've actually bought the house, your actual expenses are burstier than when renting. You might get lucky, but if the furnace or something dies in the first couple of years you won't be able to weather that loss if you were just on the cusp of affording home ownership (whereas a renter would be just fine because it's their landlord's problem). Since certain major components of the house are effectively self insured, that raises the bar for initial savings you need to purchase a house with the same financial safety as renting.
There's an additional assumption you're glossing over -- that for every apartment there exists an equivalent or worse house. At times when I needed really cheap rent I could grab a 200sq ft studio apartment, but that option isn't readily available for most home buyers.
Even assuming buying were feasible for everyone it still wouldn't be close to optimal. The extra fixed costs associated with a home purchase or sale make it much more difficult to move for family issues, school, job opportunities, .... If you're in a situation where you plan to move every couple years then renting is likely cheaper (certainly easier) than purchasing a home, even in places where the rent is higher than an equivalent mortgage.
And on and on and on. If you're going to stay somewhere a few years and have a bit of a financial buffer then I totally agree that home ownership is often a good idea. It's not that clear cut for huge swathes of people though.
A single minimum wage used to be enough for a family to get a mortgage, that has not been true in many decades in most countries.
You're just confused about who the parasites are.