Sep 30

My company receives messages and phone calls daily from prospective renters who are upset that we have nothing for rent.  Prior to March 2021, on a typical day, we would have 35-60 units for rent.  The number of total units we run has not changed.  One of the small local papers that we used to advertise in told my staff they were struggling financially because, like us, so many owners stopped advertising rentals.  Rental housing today is the Cabbage Patch Kids of 1983.  

In talking to owners it appears the dramatic reduction in vacancies is largely due to small properties being taken off the market and being made ready for sale.  Sellers want the place freshly prepped to sell fast and are aiming for owner-occupant buyers, who typically pay more.  

It is a perfect storm for this disruption.  

Small owners were severely, financially battered by a year and a half of moratoriums.   Dramatically reduced rent collection made it difficult for them to pay their bills, let alone receive compensation for their work and investment.  Harvard had a good report this week, Findings and Lessons from Two National Surveys of Landlords | Joint Center for Housing Studies  Generally, you can not harm one side of an economic equation, without ultimately impacting the other.

There is a general fear amongst owners that the government can step in at will and prevent rent collections anytime in the future for any reason, making selling more attractive.

Housing prices have skyrocketed, in part driven by low-interest rates and in part by a slow down in new construction as both materials and labor are harder to obtain.  Home Prices Continue Record-Setting Pace, Rising 19.7 % in July | Economy | US News

If you burned through all your savings, maxed your credit cards, and are three months delinquent on the mortgage, why would you not sell at the prices offered today?

I fully expect to return to normal vacancy rates within a year as we did not lose 8% of our housing stock and Milwaukee’s population continues to decline.*  However, I do not expect rents to return to 2020 rates due to the prices that are being paid for properties today and the large volume of sales.

The state, federal, and in some places local governments’ actions to “cancel rent” is the prevailing wind in this storm.  Peer pressure- I had to use a weather-related analogy. 😉  The story that these moratoriums simply delayed payment is a false narrative. Less than 2.4% of eviction judgments are ever paid, and less than a third of unpaid rent is reflected in eviction judgments.  So a short-term cancel is resulting in what is undoubtedly long-term harm for lower-income renters.

The answer is FoodShare for Housing.

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