What to expect after the eviction moratorium
strongtowns.org
strongtowns.org
I have a family member who had the misfortune to rent out a house he previously lived in (he was moving and due to some issues in the neighborhood wanted to rent his old house out for a year before selling) in Feb of 2020. I think his renter paid one month of rent, and then nothing after that. And I looked the guy up, I have sympathy for people who are really on hard times or who lost jobs but this dude is a grifter who is just taking advantage of the situation.
So he's lived there coming on 18 months paying absolutely nothing. My relative was fortunate enough to get a good dose of rental assistance (as this article said, the process was extremely chaotic), but I guarantee he will never be a landlord again. The risk/rewards of a tenant/landlord relationship used to feel well known, but now it feels like the government can basically commandeer your property at will.
So this means you are just going to be left with large corporate landlords who are diversified enough that they can take the risk. And what makes me so angry about this is that, as someone who is generally on the "left" side of the political spectrum, I see all these calls for "cancel rent", as if housing grows on trees and landlords are all some kind of Ebenezer stereotype, instead of being a lot of small-time folk just trying to get by.
As the parent poster said, most landlords are small-timers, but they get caricatured as New York slumlords scarfing down caviar while their tenants flinch over continually sparking bare wires flicker from a partially torn down kitchen wall. We have seen how the legislation passed for relief got warped to pay out to the big timers (just think of those hotel chains) instead of focusing on the smaller folks.
But when I bring up points like this, I just get the "well, if we abolished private property and everyone had a government-issued home ..." And the parent poster has had experience with that kind of comeback.
This is one of the scariest outcomes of the eviction moratorium. It is basically solidified the fact that you own nothing and the government can take and do with "your" property as it pleases when it pleases.
>you are just going to be left with large corporate landlords who are diversified enough that they can take the risk.
Again, so very true. Why do people think that big corporate landlords are going to be better than the small mom and pops they killed off? Soon everyone who rents will be paying to large kafkaesque monolith who makes you wait on the phone for 5 hours every time you have a problem.
Well, but it's property you've rented out to someone else. IMO, once you've done that, it doesn't truly belong to just you, even if the deed is in your name. Someone else has set up their life in your space—and that's why most localities have laws about when you can evict someone and the process you have to go through.
Never has there been a law that says you cannot evict somebody after 18 months of not paying rent.
I think people who continue to blame business owners are being rather obtuse and dishonest about their stance.
Honestly, a better example of that would be eminent domain, which existed long before COVID. (I so happen to be in favor of eminent domain too, but now we're getting truly off topic!)
Eminent domain has a pretty rigorous, well-defined process (or at least I hope it does). Saying "OMG COVID, NOBODY GETS TO EVICT" over the course of 1 week with absolutely fuck-all thought given to how to unwind such a policy.... totally different beast. Especially given it was only supposed to be "two weeks to flatten the curve to protect healthcare".
And yeah, without eminent domain absolutely no large public works project would ever get built. There will always be somebody, somewhere who will block a large project no matter how many concessions to make for them. Society needs ways to route around that kind of stubbornness.
I used to work in mortgage default - and yes some foreclosures. There are some really weird state laws that extend eviction protections.
In New York City, if a renter has an agreement with the person with the mortgage - the bank can foreclose on the house, but we must honor the rent agreement. We had someone rent their house to their mom for $500/month, we "got the house", but the mom got to stay as long as she paid us $500/month in rent
In Massachusetts (iirc), after filing the "first notice of default", banks need to wait well over a year before finalizing the foreclosure.
Foreclosures are ultimately handled at the county court house - and the county makes the rules. They county tells the bank "fill out this paperwork". After the 2008 recession, some counties would change the COLOR of the form and then tell banks "sorry, wrong form, start over" and let the tenants stay in their house.
I'm not opposed to any of these situations, I'm merely mentioning them because local governments can and DO place long protections for tenants.
Slow justice is another form of injustice.
If they were prevented from working or lost their jobs due to the Government lockdowns it only seems fair the Government pays their rent.
So letting property should just be risk-free profit? Being a landlord is a business and businesses fail all the time.
It was the government that took away their legal remedy without any due process.
Comparing it to any other business, imagine the government coming in and saying you will continue having to operate your business but your customers no longer have to pay.
Sure if the person has no assets at all or declares bankruptcy then that won't help. But in that case he's in the category of people that don't have any money.
I think a lot of people are unaware that there is a distinction between an eviction proceeding, which is a proceeding seeking the equitable remedy of dispossessing someone from a property, and a proceeding for damages, where you try to recover the money they should have paid you.
Eviction proceedings are typically in a specific housing court and rules are often stricter and have a lot of local subtlety. For example sometimes you can only pay a portion of what you owe to dismiss an eviction proceeding, and so on.
That doesn't necessarily change the amount of money actually owed though, which can still be recovered the normal way with a regular old lawsuit for breach of contract, unjust enrichment, and so on.
20% + 10%/extra house
So if you own 9 houses you're paying 100% in taxes, making it untenable to be a large-scale landlord. This should cause a bunch of housing to go on the market with people wanting to avoid that tax risk, also driving housing costs down
Never in a million years would any reasonable person think the government would come in and say "I don't care if they don't pay you for 18 months, you have to keep a roof over their head and play landlord to a complete deadbeat".
That is a contingency so far out of the norm it is a bit ridiculous to blame business owners for not preparing.
Blaming businesses for "not being prepared" for massive, completely unexpected government overreach is pretty lame.
Also, unless the landlord entered a 2 year lease with a tenant in February 2020, why would a landlord choose to renew a lease with a tenant who is paying $0? These eviction moratoriums do not just let any tenant stay and pay $0, there are very strict guidelines for what kind of tenants are not allowed to be evicted and for how long.
Additionally, during the Great Recession, the Protecting Tenants at Foreclosure Act was passed which required 3 month notice to tenants before beginning the eviction process, so I do think it's fair to blame landlords if they are not able to afford their investment properties when a few months of rent is not paid on time.
Nice words, but bullshit.
I know multiple people (landlords and tenants) who have been attempting to get rental assistance. After 6 months of waiting, not one of them have gotten a dime. Has anyone here (landlord or tenant) applied for and received rental assistance from California? If so, I know some folks who would love to hear how you did it.
And the landlords still cannot evict. Despite the the moratorium not being absolute (for example, you can allegedly get evicted for lease violations other than non-payment), the courts simply will not accept eviction cases at all, making it effectively absolute.
Owning property is basically a contract with a whole different kind of "governments" saying they will progressively use their soldiers to defend your property if it gets invaded by different kind of actors. So yeah.
Your friend is not the only one that got to see the harsher side of what the government is during the pandemic. People basically had their jobs made "illegal" from one week to the other because they were "unhealthy", like prostitution basically but yeah now suddenly selling luxury clothes on a mall was also like that.
I understand it feels more salient now, but the government basically always could.
They will take it over late tax payments amounting to a tiny fraction of the value.
They will take it to sell it to developers, who may not ever build anything there.
Cops will hound you until you leave if you meet some pre-crime criteria.
Or take it outright, if you rent to someone who cultivates illegal vegetation.
Or destroy it, chasing someone who might not even be in it, and you will not be reimbursed for this sort of 'taking'.
I get that the eviction thing seems new, and the goal is actually somewhat novel. But 'property rights' have never been as strong as a lot of people think.
(All of those things have happened fairly recently. I'm not going to spend the time finding a pile of links nearly everyone is just going to skip over.)
> A landlord can maintain a revolving door of low-income tenants, evict those who fall behind on rent, and keep the security deposit.
The idea this is somehow going to be a long term money making strategy is a fantasy. If a tenant pays rent on time and doesn't wreck the place, a landlord isn't kicking them out without a really good reason because there is a huge risk you get a garbage tenant who doesn't pay and wrecks the place, or you fail to get a tenant at all.
In CA you can only keep portion of deposit used for repairs, you can't use it to cover all your other overhead costs on a flip. So you are guaranteed to lose money on the flip relative to renting it.
All the gravy comes when you can keep that tenant, keep unit in good shape with little work.
The big money is going to be to the folks who are successful with actively screening tenants. I know a landlord, basically upmarket, everyone I think kept paying the entire pandemic. Now that is gravy (she refinanced a ton of the properties down to rock bottom rates, got bailout money for prop mgmt staff, and is collecting rents) - that's pure goldmine
or antisocial.
So evictions are actually because landlords like evictions rather than getting paid and making money while doing very little work?
Does this logic track for anyone?
Eviction timelines in CA under best of case circumstances are measured in months. That starts usually well after someone has fallen behind on their rent.
So you are 4-5 months out on rental income minimum.
And even in a reasonably well kept place by tenants (not common) you are going to be doing repairs / new carpet / new paint etc. Then the showings / applications / screening cycle begins again.
In CA deposits even earn interest.
So this claim, that landlords like renting to bad tenants so they can go through the CA eviction process when the tenants stops paying and damages the place to make money by maybe getting a contractor to inflate some kind of repair that they think they can get away with - is a real stretch.
In most evictions the default in rent alone will eat up most or all of the deposit. Landlords just wish they could get tenants out faster so the deposit would cover more of what is ultimately owed in these cases. There is not tons of extra deposit money floating around here.
> In CA you can only keep portion of deposit used for repairs, you can't use it to cover all your other overhead costs on a flip. So you are guaranteed to lose money on the flip relative to renting it.
I’m not endorsing the notion that there is a grand conspiracy to house and evict tenants to steal their security deposits. Just saying that landlords can and do opportunistically steal deposits, even in California. That can’t be the reason the grand conspiracy is impossible.
The dirty little secret of high housing costs is illegal immigration. We limit immigration for a reason, and that reason is not to overburden our infrastructure. When you bring in an excess 1 million people, as we did last year, nearly all of them low wage workers, they take up the little amount of low income housing stock available. That drives up costs. There are other factors, of course, but that would be the easiest to remedy.
Probably not too many slumlords on HN, as evidenced by sibling comments.
I think the shock will be releasing the dam all at once after you've held back all of the water in its entirety for over a year instead of letting it trickle naturally, and giving those people room to find what to do. Now they're all going to be scrambling for the same resources all at once, and in a lot larger numbers, in a time when those things are getting more expensive and rare. I believe this solution is much worse in the long run than what it was trying to prevent. For the renters, the landlords, everybody.
> a system out of whack
The moratorium was outside of the system, artificially created by politicians, imposed on the system. AFAIK, there has never been a moratorium of this kind in US history.
Edit rather than replying to 5 people saying the same dumb thing:
Sure, some people got assistance, many people even did, but when something like 1/4 of Americans have less than $5k in savings and the government stimulus payments took several months to reach bank accounts (more if you hadn't filed in prior years) -- maybe, just maybe further interventions were important to keep people off the street and out of communal housing?
Homelessness was not the only outcome. Many of those unable to pay rent would have been able to borrow money, sell off assets, receive government assistance, make forbearance agreements with their landlords, or move to lower cost housing. The burden could have been shared among tenants, landlords, lenders, and governments. With the moratoria, however, all of the burden fell on landlords.
Edit: Also unemployment (often expanded beyond normal payment amounts and extended for longer durations) and federal stimulus checks.
And the beauty is absolutely nobody can look at the data and truly say any of these massive government mitigations did a single bit of good at all. They, in my opinion, took something bad (600,000 people dead in the USA) and made it 100x worse.
Again... all these health "experts" did is take something bad and make it 100x worse. Pretending these interventions didn't have any costs and gaslighting the hell out of anybody who brought up objections was one of the more evil things society has done over the last 1.5 years. Perhaps only topped by forcing people to die alone in the hospital because of "covid policy" or keeping kids out of school for more than a year and then forcing them to wear masks all day when they return all for a disease they aren't at all affected by...
This last 1.5 years has been an absolutely shameful display of humanity at its worst.
A minimum of 600k Americans died. That's the world with all of the interventions (many of which were probably unnecessary in retrospect!). Could we have pared some down sooner? Sure but it's 100% guaranteed that the death count would have been much higher had we done nothing like you seem to have think would have been a good idea. Stopping in-person school and travel and universal masking are self-evidently going to reduce transmission, so I have no idea what "study" you expect to see.
This is just covid denialism churched up with some historian's fallacy.
Again, what was 100x worse? In your world in which kids went to school and we let healthy people come-and-go from covid-infested hospitals, how many more people would have died to justify that "freedom"? Our CFR is something like 2% (before Delta) - what does that calculate to if a few more tens of millions of additional people got the disease?
And quoting CFR is very poor form. The IFR for OG covid in folks under like 65 is something under 0.1%. For children, you should be much more worried about fires and pools.
There was no "trickle naturally".
Unemployment rate February/April 2020: 3.5/14.8%
Now combine this with:
- Higher chance to be crippled by healthcare debt
- 78% of US workers live paycheck to paycheck (2017)
It cannot be both.
Unfortunately, the engine driving this thing (the whole country) is real estate as an investment.
Uh, of course it can.
I see this mentioned often, as if it's supposed to be obvious, but I don't really get it.
Care to explain?
We expect the value of our investments to rise at a rate faster than inflation.
If housing is a good investment eventually it becomes unaffordable for the minimum unit per person.
We are so used to the concept that housing always goes up that it is hard to grasp, so a good thought exercise is to flip housing with food.
Imagine if the price of food went up more than inflation year after year, and cities restricted how much of it could be grown and sold. We would have people that buy and hold food so they can sell it to hungry people for even more next year. Some people would starve because no one is selling anything below a certain price.
North America has built a system around the idea of housing values always going up. But eventually you hit a limit where a necessity of life becomes completely unaffordable (compounding returns being what they are). So if you believe that housing is an investment in aggregate (that is that all housing lumped together will rise faster than inflation), then the inevitable conclusion is that housing becomes unaffordable for more and more people higher and higher up the income chain (Ahem, bay area).
Every other good that we consume with tends to go down in price (indexed to inflation especially when value is considered). Food, clothing, electronics, cars are all much better deals than they were 50 years ago. Housing is the opposite
Those things all get used up, worn out, or obsoleted over time. Land area does none of the above.
A 10 year old TV is inferior in every way to a new one that costs less in absolute and real terms, the value is incredible. The same is true for cars, clothing, and most other things we buy.
Housing hasn't improved, but the cost has risen incredibly. Housing, as a good, is rather unique in this way, and this isn't true globally. A 30 year old housing unit in Japan is something that gets torn down. In North America the age of a home has little to do with its price.
The problem is investment returns for land, especially in combination with density restrictions. That’s where the housing affordability problem comes in.
How do these people end up here in the first place?
Why so many people living in the most prosperous country in the world saving nothing for themselves?
Why people over spend so much and live so much beyond their means?
How and when would people take some serious responsibility for themselves?
I bet that you find much less first-generation immigrants in this situation, even though they make much less income and are in much more disadvantage in every part of their lives.
Think about that.
It's far better to have an empty unit than a unit occupied by someone not paying rent. I remember having to show canceled rent checks as part of the application process for a new place. If I were a landlord, this [or an equivalent] would become part of the application process.
When was the last debt jubilee in America(which is where all of my debts are)?
Also that's the last time the US defaulted on its debt in real terms (i.e. 1971 and the Nixon gold shock)
https://www.pewtrusts.org/research-and-analysis/reports/2020...
I considered doing this because I got scammed by a water heater rental company that was asking for a ridiculous sum when I bought a new home, but eventually decided to avoid the credit hit. If I were closer to retirement it would have been a no-brainer.
you would pay your debts because even if debt jubilees were possible you don't know when it will happen and can't predict it with any degree of accuracy and it's not worth the trouble that would be caused by being wrong
If you can service reasonably cheap debt and still live decently you may as well take it because a "debt jubilee" is like a lottery win if you happen to hit one in your lifetime, and I'm assuming you'd have them more frequently than that?
My best guess: debt would be dramatically more expensive as lenders would have to factor it into the price, and home affordability for young people would drop even lower than it is today if this were a thing. Debt jubilees would seem to actually entrench the current upper and middle classes.
Not paying your debts has consequences, even if the _may_ be forgiven.
Likewise lending for interest is still profitable, even if it carries risk.
I think in general I'm +0 on debt forgiveness for individuals. But it's not fair to speculate about the behaviours it would induce when we can observe already what related behaviours very much already induce.
IMO the real losers in a debt-forgiveness scenario are the "responsible" ones who avoided doing something beneficial in order to not be overstretched— or maybe were even prevented from taking on debt by structural/classist barriers around credit-worthiness, job status, etc.
For example, someone who now makes less money because they went to the cheaper state college, and has lived a simpler life afterward because they diligently paid it off every month. This person could be understood for feeling a bit crummy if they look over and a former peer who traveled far away for school, lived extravagantly, and rolled the debt forward for years now enjoys having it disappear in a poof.
In 1970s you could have taken out fixed-interest rate debt (if you had the foresight), which would have been devalued as part of the 1970s inflation due to the 1971 Nixon Shock, so perhaps if you knew that you could come out ahead at the time.
Usually debt jubilees work by transferring private debts onto public sector and then having the public sector default in real terms (by devaluing the currency).
It could still be a net win. But it's going to come down rather badly on some people, and they aren't all rich rentiers...
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As a whole, the USA is awash in cash.
If millions and millions of people lose their homes, it will be a boondoggle for large REITS (Real Estate Investment Trusts) and other companies investing in real estate.
In 2008, when the housing market crashed, huge companies bought up all the properties for cheap.
These companies want to make a nation of renters, and get rid of homeowners, except for the wealthy, of course.
Why do you think housing and rental prices are accelerating by an unprecedented amount? It's because the large REITs are slowly gaining monopoly power and raising prices. There is not one single county in the USA that is affordable to rent, to someone making minimum wage. Affordable means that rent is less than 33% of income.
I don't have a solution. What would happen if the large companies ended up owning 80% of the housing and apartment units? They could charge whatever they want. They would be in total control.
For example, Invitation Homes, a subsidiary of Blackstone Group, went on a $10 billion real estate buying spree, purchasing $150 million worth of houses per week. They easily outbid anyone else.
“He had a handful of cashier’s checks. These new guys had duffle bags full," said one buyer at a foreclosure auction.
Corporate homeownership can not only subject tenants to higher living costs, but often destroys their ability to buy these homes themselves, as companies pay top dollar, in instant cash, to take them off the market.
In 2011, Morgan Stanley issued a report called “A Rentership Society.” With over 1.6 million foreclosed homes in the United States and more on the way, the report forecast “a surge in the number of renters and a potentially massive opportunity for investors to convert the glut of repossessed homes into rental properties.”
Of course, the very wealth corporations, and their owners, continue to bribe the shit out of government officials (lobbying = bribery on that scale) to prevent any curtailment. There is a lobbying organization, the National Rental Home Council, to look after their interests in the government, such as defeating rent-control laws.
As investors realized the extent of their gold mine, they branched out beyond simply buying foreclosures and hit the open market, competing with everyday homebuyers.
Here is an example: a high bid of $208,000 came from a couple with a child looking for their first house. American Homes 4 Rent matched their offer, all cash. They got the house, the seventh it had purchased on that street.
As a result, rents have skyrocketed. When visited with the town’s vice mayor, Bruce Hull, in April 2017, he was told that, it hasn’t been that long since you could get a three-bedroom, two-bath for $1,000 a month. Those houses were now closer to $1,800 a month, and this was by design.
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There is the saying: capitalism is the worst economic system, except for all the others. Well, the way in which capitalism is the worst is monopolies. The accumulation of wealth by the top percentage of a population. This is the reason there is trust-busting, as done by Theodore Roosevelt for example, is to stop the inherent unfairness built into the capitalist system. This is not a fairy tale, or made up. Monopolies are the main real drawback of capitalism. So that is really the main thing to watch out for in a capitalistic society. Government must to stop monopolies. Including Facebook, Google, etc.
Corporations are NOT entities to themselves. Government gives them rights and permissions to start corporations. It is government that allows corporations to exist as a legal person, and shield investors from being personally responsible for debts if a corporation goes bankrupt.
A corporation must apply to government and get permission before it opens. If you look at laws, governments can ban all kinds of corporations, regardless of what the owners want. It is the government which is in control, at the very base of it. For example, a governmental entity (town, city, etc) can ban all strip clubs from starting in their city. Or make heavy industrial companies, like auto repair shops, only open on certain streets in a city with zoning laws. They can prevent people from starting a company in their city if the person is on record for being a cheater or bad person. A company does not have unrestricted rights and it is specifically under the control of governmental rules and regulations and permission.
Breaking up of monopolies is great. When AT&T was a monopoly, there was zero innovation. Why did the have to innovate? They had a monopoly. There were basically dial phones with the rotating dial. I remember when push button dialing started, it was earth-shatteringly cool. Then they had a "princess phone" that they introduced. But that was it. You had a choice of 3 models.
When AT&T was broken up, there was an explosion of innovation. Thousands of phone choices. Cell phones. Pagers. It was great.
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For these REITS and corporations buying up homes, there should be a hard ceiling of how many homes and apartments that they are allowed to purchase, and this should include subsidiary companies - no trying to get around it by slimy business tactics.
I mean we all know why this isn’t the case. It’s also why Democrats aren’t pushing for it either.
Um, no, we don't all know why. What are you saying is the reason?
Poor and homeless people overwhelmingly don’t vote. Land owners are overwhelmingly in favor of zoning and land use policy that preserves the value of their homes.
Anyone trying to pass laws at any level from municipal up to the state and especially federal levels is likely to face near universal backlash across party lines, unfortunately.