Nov 28

There are those who see rental housing as a zero-sum game — the only answer to the COVID rental economic crises is to have the property owners absorb all the lost rent.  

What we learned from looking at the September 2015 and May 2019 Milwaukee County eviction data that less than 2.4% of eviction judgments are paid even after five years, with less than seven tenths of a percent paid within six months.  

So when you read of $50-120B in rent debt due before the economy returns, that means someone is expecting $47.5B to $117B will be borne by housing.  

The right answer is for renter advocates and housing advocates to work in unison to get the funding necessary to prevent evictions and stabilize rental housing .

If the rent is paid, people will not need to worry about eviction, nor will they have to worry that rental housing will fail, also leaving them homeless and facing higher rents in the future. And let’s not forget the cost of housing foreclosures on municipal budgets.

Nov 14

If you want to share this or any other housing concerns with your elected officials, go to democracy.io and enter your address.  The site allows you to write to both your US Senators and your Congressperson at the same time without searching for their emails or finding who represents you.

We should be asking for housing assistance to prevent the failure of both renters and housing.

If you do write – I’d appreciate if you send me a copy to Tim@ApartmentsMilwaukee.com

Notes on housing, supported by reliable sources such as Census.gov

74.4 % of rental properties owned by individual investors. Source: https://www.census.gov/newsroom/press-releases/2017/rental-housing.html and in an easier to read format in this report from Harvard: https://www.jchs.harvard.edu/blog/who-owns-rental-properties-and-is-it-changing


55% of rental units as owned by part-time landlords: https://www.avail.co/education/articles/state-independent-landlords-2017


Rent debt will be $25-34B by January 1st. https://www.ncsha.org/resource/current-and-expected-rental-shortfall-and-potential-eviction-filings/ 

roughly 10 – 14 million renter households — home to 23 – 34 million renters — were behind on their rent by a total of roughly $12 – $17 billion as of September 14, 2020.

These renters will owe $25 – $34 billion by January 2021,
(from a chart just below the P1 fold)

More State-Specific info at: https://assets.aspeninstitute.org/content/uploads/2020/08/chart3_fsp.png

Local economic multiplier of rent payments from a report by Brookings Inst.
 

RENT HAS IMPORTANT MULTIPLIER EFFECTS IN THE LOCAL ECONOMYRent checks don’t just line the pockets of fat cat landlords—they also contribute to essential government services and other workers’ wages. If many households are simultaneously unable to pay rent, the economic impacts will be felt throughout the local economy.

The first entity that gets paid by a monthly rent check isn’t the landlord—it’s the local government. Property taxes have a higher priority even than mortgages; if a landlord falls behind on both property taxes and mortgage payments, the local government’s claim supersedes the lender’s.

Cities and counties rely on property taxes from all their constituents—individual homeowners as well as owners of apartments, offices, and other nonresidential properties—to cover the cost of providing public services. Although local governments could defer property tax payments during the current crisis, the pandemic is already stressing local government budgets. Cities are front-line providers of health care and emergency services, and also need money right now to feed children whose public schools are shut down and care for older adults and vulnerable populations.

https://www.brookings.edu/blog/the-avenue/2020/03/25/halting-evictions-during-the-coronavirus-crisis-isnt-as-good-as-it-sounds/ 

Census reports that the average rental unit generates $1,198 per unit per year in wages.
https://www.census.gov/data-tools/demo/rhfs/#/?s_byGroup1=12&s_tableName=TABLE4&s_type=2
Mean Payroll Costs for Employees Per Housing Unit 1,198

We can fix evictions for what it costs to allow the problem to continue
https://assets.aspeninstitute.org/content/uploads/2020/08/Evictions-Data-Update-August.pdf

Providing shelter and services to a family experiencing homelessness can cost local governments $10,000,[1] which is more than the $9,120 average annual cost of one housing voucher to the federal government[2] 

[1] Evans, William, James Sullivan, and Melanie Wallskog. “The Impact of Homelessness Prevention on Homelessness.” Science, 333:6300 694–6999, 2016. https://science.sciencemag.org/ content/353/6300/694.full.

[2] U.S. Department of Housing and Urban Development. “Snapshot of Housing Choice Vouchers, 2016,” June 2018, https://www.huduser.gov/portal/elist/2018-june_08.html

Impact of the 2008 housing crises on Milwaukee

The following is from a letter we wrote to Milwaukee’s mayor.  It outlines some of the economic factors of rental housing and the harm that will come if there is a mass failure.  In 2008 smart money could see prices rising over a two and a half year period at a rate not sustainable by wages.   In 2020 the economy was screaming, then two weeks later it stopped. The suddenness of the event is a recipe for disaster.

If action is not taken to avert this, the aftermath of 2008 will look like a walk in the park on a sunny day.


A December 2019 Milwaukee Dept of City Development report  stated “The economic impact of the Great Recession and mortgage foreclosure crisis has had a significant, detrimental, and ongoing effect on City households.” DCD 12/2019.[ii]  Foreclosure filings in Milwaukee County were three times higher in 2009 than last year.[iii] From 2008 through 2010,16,000 Milwaukee properties were in some stage of foreclosure by lenders and the city.[iv] In those two years, the tax base lost almost $2 billion in value, with a resulting $16.7 million loss of tax revenue.  The resulting demolitions had a large impact on the City’s budget due to the cost of razing along with the impact on the property tax and municipal services collections.[v] The neighborhoods where those properties were located suffered long-term damage.  We continue to feel that impact even today, and we certainly hope to avoid a similar outcome in the future.

[ii]Section 2: Housing Needs and Demand Housing Affordability Report Department of City Development  |  December 2019 https://storymaps.arcgis.com/stories/eb043b089173407aa469eba948dd9601

[iii] State’s Foreclosure Rates Have Plummeted » Urban Milwaukeehttps://urbanmilwaukee.com/2019/07/11/states-foreclosure-rates-have-plummeted/

[iv] www.sewrpc.org/SEWRPCFiles/HousingPlan/Files/foreclosure-in-milw-progress-and-challenges.pdf

[v] Tom Barrett wants to spend $2.4 million on home demolition, rehabarchive.jsonline.com/news/milwaukee/barrett-wants-to-spend-24-million-on-home-demolition-rehab-b9933176z1-211401301.html/

Nov 12

Household debt was at a moderate level relative to income before the public health shock, but many households have lost jobs and seen their earnings fall. As many households continue to struggle, loan defaults may rise, leading to material losses.  

https://www.federalreserve.gov/publications/files/financial-stability-report-20201109.pdf

Nov 07

https://www.greaterohio.org/publications/2020/11/4/local-interventions-for-eviction-prevention-and-why-they-are-needed

The Greater Ohio Policy Center (GOPC) has released Local Interventions for Eviction Prevention and Why They Are Needed, a guide for laying the groundwork to support Ohio renters and prevent evictions related to the COVID-19 crisis. 

Experts anticipate a tsunami of evictions to begin in January 2021. Given the limited state dollars available and the uncertainty of additional federal dollars, local governments must take the lead to protect their residents. This Working Paper profiles interventions from around the state in order to provide ideas and templates for communities that need housing stabilization programming.

https://static1.squarespace.com/static/59396fee59cc6877bacf5ab5/t/5fa3267c92abc63d53774755/1604527743492/Local+Rent+Assistance+Working+Paper.pdf

Some interesting concepts.  One is Pay and Stay, which I would support:

Community Spotlight: Pay to Stay Ordinance, Village of Yellow Springs Under “Pay to Stay,” a landlord is obligated to accept back rent (including reasonable late fees and court costs) up to the point where the bailiff is knocking on the door to begin physically removing tenants’ belongings. Pay to stay prevents a landlord from evicting a tenant where the tenant can pay back rent and reasonable late fees prior to the eviction judgment. If the eviction has been granted, the tenant can stop the eviction by paying back rent, reasonable late fees and court costs.

Nov 06

Featuring: How To Navigate Eviction Moratoriums

We are excited to announce Attorney Tristan Pettit’s Landlord Boot Camp will be held on November 14th, 2020. 

Due to recent changes impacting the CDC National Eviction Moratorium, we delayed the event to include the most timely information on navigating the current Moratoriums. 

The Saturday, November 14th event will be held as a live-streamed webinar from 8:30 AM -5:00 PM with live Q & A from 5-6 PM. 

Enjoy these advantages of the new virtual format:

  • Attendees will receive a searchable PDF Boot Camp manual, making it easier to search and reference items in the future.
  • A recording will be available to attendees for 14 days after the event to re-watch portions that you want a deeper understanding of.
  • Attend the event from the comfort and safety of your home. 
  • As in prior Boot Camps, the live Q & A session is part of this event.
  • You will receive all of the same information normally presented in Landlord Boot Camp PLUS the latest information on navigating the CDC and CARES Act eviction moratoriums. 

For pricing and registration click here:  

https://aasew.org/event-4043452

www.aasew.org

Nov 06

Since June I’ve been saying that the COVID economic crisis is going to make 2008 look like a pleasant walk through a park on a sunny day. Sadly more and more indicators are pointing to that being the case.

In 2005-2008 smart folks could see that housing prices were unsustainable and either sold, like many of my buddies did, or at least stopped buying.

In 2020 the US and world economies were flying high. Then in a matter of a couple of weeks, everything came to a sketching stop. This was unpredictable and no one was prepared. This was compounded by the dysfunction of our federal government.

Even without eviction moratoriums, rental housing providers will fail. With the government pushing this entirely onto the back of the property owners I see a future of much higher rents and municipalities struggling to survive right alongside the property owners.

Forbes has a great article outlining the precarious conditions facing the housing market.

Mortgage delinquency rates are at a 20-year high  worse than the 2008 high if that tells you anything (and it should), and there are predictions that at least two million mortgages will soon go into default. And that is just the tip of the iceberg, as an estimated six million folks missed their mortgage or rent payment in September. The economic news isn’t too hot either, as the so-called “third wave” of coronavirus cases that is beginning to his the U.S. is already proving to be the worst yet

Nov 05

An important piece from DSnews

In an opinion piece published on the Informed Comment website, John Buell, a former professor at the College of the Atlantic, observed that an after-effect of the COVID-19 pandemic’s economic trauma will weigh on the housing market as homeowners and renters struggle to keep up with housing costs.


“If foreclosures and evictions are standing in the way of recovery, it is also safe to say that the draconian cuts in budgets of state and local governments translate into wage reductions and/or unemployment for public sector workers and thus more pressures on the housing market,” Buell wrote. “If homeowners and government workers are not able to create sufficient demand to restore economic growth the federal government must step in. State governments are constitutionally prohibited from borrowing for daily expenses.”

Oct 15

The Massachusetts Governor puts $171 Million into emergency housing funding. Advocates call it “a drop in the bucket”

The story is in Boston Magazine

Oct 14

Although the CDC guidance issued last Friday provides a mechanism for owners to challenge declarations that appear fraudulent, it should have little overall impact. If a large portion of the tenant population has no ability to pay rent or simply decides not to pay, housing will fail.

The Census Pulse shows nationwide 17.9% of tenants did not pay their August rent. (The reporting trails by about three weeks. Sept should be out next week) https://www.census.gov/data/tables/2020/demo/hhp/hhp15.html Scroll down to the housing tables.

Wisconsin is doing better at 11.9%. I attribute our slightly better fortune to our tenant advocates, our Governor, and those who support landlords working far more collaboratively than other areas. Some metros are hovering around 20% of tenants who are behind, Los Angeles nearly 19%, NYC ~23%.

When you take into account that in good times typical owners receive 7-9% of the gross rent for their effort and investment, and today collections are off by 18%, it is easy to see we are on a collision course with massive housing failures.

A scarey side note: Nationwide 10.8% of homeowners did not make last month’s mortgage payment. This will open the door to another corporate housing buy out. https://theintercept.com/2018/01/20/you-think-your-landlord-is-bad-try-renting-from-wall-street/

It is estimated that unpaid rent by 12/31/2020 will be $34 Billion. This deficit will devastate both renters and housing for many years to come. In turn the harm to housing will continue to haunt tenants through reduced housing choices and increased future rents as owners try to stabilize.

Whether moratoriums exist, the true need is for rent assistance. This need has existed well before COVID. If renters are able to pay their rent, they avoid eviction and insurmountable debt, while enabling owners to pay their obligations as well. So far our federal government is failing at providing that assistance.

Oct 13

A well thought out comment on the post moratorium housing crisis

https://www.citywatchla.com/index.php/cw/los-angeles/20564-landlords-are-not-the-devil

The government’s destruction of small landlords in 2020 will be calamitous for tenants in 2021 and beyond. There will likely be an outbreak of foreclosures and sell-offs by those who are unable to endure the eviction-moratorium storm. When the small landlords disappear, so does much of the affordable housing. Corporate investors, real estate conglomerates, and Wall Street vultures will swoop down for the kill, snapping up properties, remodeling them, and raising rents. In the end, communities will be left with fewer economical rentals, and the chasm between the rich and poor will be a little wider. 

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