An article from Bloomberg that concisely lays out the two main problems facing rental housing and tenants.
The U.S. had a pretty “stingy” safety net when it came to housing before the pandemic, said Mary Cunningham, vice president of the Metropolitan Housing and Communities Policy Center at the Urban Institute.
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But over the long-term, rental revenue will decline because of missed payments and lower occupancy as tenants look to save money by doubling up with others, Pawlowski said. Landlords could end up missing more than $22 billion in rent over the next four months, according to the Stout analysis.
$22 Billion in loses will impact rental housing costs and availability for years
We stopped charging late fees on April 1st, 2020, prior to the moratorium. We did not charge any late fees for July, despite it again being legal to do so for most tenancies. (It is illegal to charge late fees for CARES Act covered properties until August rent and illegal to charge late fees if you are receiving mortgage forbearance on a federally insured mortgage)
Normally we have a due on the first, late on the 5th policy. At the close of business on the 5th, we charge a $15 late fee. If the rent is still not paid by the 12th, there is an additional $35 late fee, for a maximum of $50 late fees in a month. Our staff can forgive one late fee per tenant per year without asking for permission. We also do not charge late fees for tenants who are on a payment schedule, for example, they pay twice a month to coincide with their payroll.
Per diem (daily) late fees are problematic and can violate usury laws. For example, a $25 a day late fee after the fifth is $625 if the tenant misses a month.
We have all heard reports that say residential rental evictions surged due to the Wisconsin eviction moratorium expiration in May.
The real numbers show a 30% decline for the first six months of 2020 versus 2019. How can this be true, you ask?
Listen in as WRA chief lobbyist Tom Larson and residential rental expert Tim Ballering from the Apartment Association of Southeastern Wisconsin (AASEW) break down the actual numbers and provide valuable insights into the eviction issue in Wisconsin.
A tsunami, an avalanche, a flood, a pandemic, and now a cliff of evictions.
No wonder no one tries to fix the root causes… some see it as a natural disaster, rather than something that with diligence can be fixed in a manner that is good for both tenants and housing.
When Desmond started, he had a great goal – universal housing vouchers, similar to food stamps, for people in need. But along the way, Matt was abducted by the Eviction Defense gang, a zero-sum game where individual tenants have small wins at the expense of the greater good for all tenants and housing.
Rather than eviction “defense,” which harms other tenants and housing by passing the cost burden to both, the better solution is eviction “prevention.” Even the recipients of the eviction defense come out of it with damaged rental histories. Excluding the attorneys, there are no long-term winners, only multiple losers.
Often eviction defense results in a tenant being able to stay for an extra month without paying rent. I wonder if there would be similar or better results if the money spent on eviction defense attorneys is used to pay a month or two of rent.
How many tenants have multiple evictions, or move without fulfilling their rental agreement every few years? Some get parents and friends to “front” for them as they cannot obtain housing independently from property owners. Others seek out small owners who do not know how to screen or go to owners who don’t care as long as they have a fist full of move-in money.
Prevention needs to occur before the rent is missed.
People at the bottom rung of the income scale will always have problems paying rent unless there is something like rent vouchers to help. What other societal costs could be reduced if the constant moving were to be reduced? I think there is a significant safety factor in knowing your neighbors, making it more likely you watch out for one another. What is the impact on schools as kids move, not just due to housing, but also utility disconnects? And so much more.
As I have said to Desmond in the past, I fully support his universal housing vouchers and am willing to work hard to promote it.
The numbers of people at risk of going over this “evictions cliff” are staggering: Data collected by the U.S. Census Bureau indicates that between 43 and 45 percent of adults live in renter households affected by recent job or income losses, and nearly half of all renter households were struggling to make ends meet even before the virus hit. A UCLA analysis projects that in Los Angeles County alone, about 120,000 households—including 184,000 children—are likely to experience homelesseness, and Black, Latinx, and poor families will suffer the most.
Having a lawyer in housing court can give tenants facing eviction a fighting chance: A March 2012 Boston study, for example, found that about two-thirds of people in the group with full-service representation were able to keep their homes, compared to one-third in the group that received more limited legal help. In Seattle, the King County Bar Association’s Housing Justice Project found that tenants with counsel are more than three times as likely to avoid a forced eviction executed by the local sheriff’s office and reach an out-of-court agreement with their landlord. When the agreement includes a payment plan for catching up on rent, tenants remain housed nearly two-thirds of the time.
Below is the letter the Apartment Association sent to Mayor Barrett, President Johnson, and the Common Council on June 15th, 2020. We have yet to receive a response, but still hopeful that those representing housing providers are included in designing a meaningful solution to these problems
Dear Mayor Barrett
We are pleased that Milwaukee is considering offering financial help for tenants who are struggling to pay rent, and we would like to be a part of the process. We have been working with a coalition that includes Community Advocates, Legal Action, Legal Aid, and Mediate Milwaukee. The AASEW can bring valuable experience and insights to this effort, and we hope you will strongly consider our offer to participate in your deliberations.
While we applaud Governor Evers’ $25 million Wisconsin Rental Assistance Program, it represents approximately $30 of assistance per rental unit in Wisconsin. We believe the size of the rental population in Milwaukee and the financial fallout from the COVID-19 pandemic may necessitate a more robust response.
In our view, sustainable rental housing is critical to the well-being of Milwaukee. Nearly six in ten, 58.2%, of Milwaukeeans live in rental housing.[i] In some neighborhoods, such as 53233, the number of renters exceeds 97%. The success or failure of neighborhoods and rental housing are closely tied. Currently, Milwaukee offers some of the most affordable metropolitan rents in the nation, a significant advantage compared to similar-sized communities in the country.
However, if landlords cannot collect rents and continue to cover the operating expenses for their properties, the impact could be worse than the 2008 housing crisis. “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.
Rental Housing is the largest small business in Milwaukee, with over $10 billion[vi] invested in the City. Rental properties account for more than $700 million dollars per year of economic impact, starting with $270 million[vi] paid in property taxes.
In 2018, the Census Bureau found the yearly mean operating costs, excluding mortgage payments, per unit for rental properties was $5,270. [vii] Milwaukee’s rental housing contributes $1,198 in wages per unit, $161 Million per year. But more than direct wages are involved. There is also the local multiplier effect because the wages paid to employees of Milwaukee landlords are a major economic factor in the well-being of the City and its residents.
These numbers highlight the critical importance of a healthy and vibrant rental housing market in Milwaukee. We hope you will accept our offer to participate in the upcoming process to deal with the fallout from the COVID-19 pandemic and Eviction Moratorium this year. Thank you for your consideration, and please feel free to use the contact information above for any clarifications or questions you may have.
Sincerely,
Ron Hegwood President Apartment Association of Southeastern WI, Inc
Landlords argue that they are unfairly being forced to absorb the brunt of the financial burden of pandemic job losses. “Why isn’t food free? Why isn’t clothing free? Why aren’t all the other necessities of life free, yet shelter is being made free?” said Sherwin Belkin, a legal adviser for the Real Estate Board of New York, which represents property owners.
The government, he said, should provide vouchers to tenants who cannot pay rent because of the pandemic, and landlords should be allowed to use the courts to evict those who still do not pay. “Something is wrong when a private industry is being asked to take on its back what is really a public housing emergency,” he said.
Similarly, Chicago has seen record homicides. They had 18 shooting deaths in one 24 hour period, with 329 people murdered in the first six months, which was “only” a 34% increase over last year. Shootings in Chicago were up 75% in June, with murders up 78%.
I think we can all agree that even one murder is too many unless the victim is on Arya Stark’s list (GoT) “Joffrey, Cersei, Walder Frey, Meryn Trant, Tywin Lannister, The Red Woman,…”