Oct 09

A good, should read, article

https://reason.com/2021/10/08/the-eviction-tsunami-that-wasnt/

The predictions were dire.

“The tragic, consequential, and entirely avoidable outcome of this ruling will be millions of people losing their homes this fall and winter, just as the delta variant ravages communities and lives,” said Diane Yentel, president of the National Low Income Housing Coalition, in late August.

“The Supreme Court failed to protect 11 million households across our country from violent eviction in the middle of a deadly global pandemic,” said Rep. Cori Bush (D–Mo.), citing one estimate of how many renters were behind on rent.

But the reality was different

“It’s going up but it’s not going up by a ton,” says Peter Hepburn, a sociology professor at Rutgers University and researcher with Eviction Lab. “You look at September relative to historic averages, that leaves eviction filings at 48.5 percent below historic averages…We didn’t see a jump up to normal, let alone a jump past normal into a giant wave of eviction filings.”

Aug 26

Last night the Supreme Court ruled that the CDC eviction moratorium is invalid.

What should you do now as a rental property owner?

Little should change with or without the CDC moratorium. It remains in the owners’ and renters’ best interest to work together to get the ERAP funding. The only reason to evict for nonpayment at this time is if the renter refuses to apply for ERAP or does not qualify due to no loss of income. In Milwaukee or Waukesha Counties, they can apply at Community Advocates. City of Milwaukee residents can also apply at SDC

If the renter is refusing to apply, try Mediate Milwaukee or call (414) 939-8800. It will only delay for a few days and often provides superior results to eviction as renters often stay and pay. If the renter refuses this as well, then eviction is probably the only option, but it should be the last option.

Remember that in Milwaukee County less than 2.4% of eviction judgments are paid within 5 years, less than 7/10ths of 1% within 18 months. So rushing to court only stops future losses, it seldom results in recovering past rent.

Aug 06

Little should change with or without the CDC moratorium. It remains in the owners’ and renters’ best interest to work together to get the ERAP funding. The only reason to evict for nonpayment at this time is if the renter refuses to apply for ERAP or does not qualify due to no loss of income. In Milwaukee or Waukesha Counties, they can apply at Community Advocates. City of Milwaukee residents can also apply at SDC

If the renter is refusing to apply, send them to Mediate Milwaukee https://www.mediatewisconsin.org or call (414) 939-8800. If the renter refuses this as well, then eviction is probably the only option, but it should be the last option. Remember that in Milwaukee County less than 2.4% of eviction judgments are paid within 5 years, less than 7/10ths of 1% within 18 months. So rushing to court only stops future losses, it seldom results in recovering past rent.

The current CDC order addresses this issue at page 14, explicitly permitting challenges to improper declarations. Milwaukee County Court previously was requiring a motion hearing to challenge the dec. With the new CDC order, and if owners state the challenge to the declaration in the initial pleading/complaint, the Court should hear the challenge without the extra delay of a motion hearing.

The new CDC order at page 14:

This Order does not preclude a landlord challenging the truthfulness of a tenant’s, lessee’s, or resident’s declaration in court, as permitted under state or local law.

Jun 18

The Guardian has a longer, but interesting article on the end of the CDC moratorium. I recommend reading it

Unpaid rent is a large problem. The article of course looks at this from the renter perspective, but the $50-100B of unpaid rent currently has only impacted owners due to the moratoriums.

In mid-May, 7.49 million US adults said they were not current on rent or mortgage payments and had slight or no confidence they could make next month’s payment, according to the Census Bureau’s Household Pulse Survey.

So far, the eviction moratorium has kept many of these families housed. There were 1.55m fewer eviction cases last year than would be filed in a typical year, according to an estimate by the Eviction Lab.

Without the moratorium, they will need access to the $46.55bn in rental assistance allocated by the government to help renters and landlords – though its distribution got off to a slow start.

The Guardian

The federal aid favors rural states, with few renters over urban areas. The taxpayers’ money should be distributed where the need is, not on political lines. This is a point that Heiner and I agree with Peter Hepburn of the Eviction Lab. We all need to urge Congress to fix this.

And Hepburn has found that because of the way the assistance is being allocated, more money will be available in small, rural states than in larger, urban states.

Black and Latino renters, particularly women, are disproportionately at risk of eviction and face more uncertainty as the moratorium expires.

“It was a series of omissions and mistakes that taken jointly result in a really inefficient and inequitable distribution of this money,” Hepburn said. “I don’t know that that was done with any sort of intent to disadvantage communities of color but I think it inevitably does.”

Geographically the evictions crisis will also be unevenly distributed.

In Wyoming, households can collect more than $5,167 in rental aid, while in New York’s expensive renter markets, households will have access to $766, according to his analysis.

Jun 05

As a rental property owner, it is in your self interest to work with the renter, secure Emergency Housing Assistance, and get the back rent paid.  If you evict, you no longer will be able to recover the unpaid rent through these programs.  

Only 7/10th of 1% of eviction judgments are paid within the first year, over five years that number is only 2.4%.   Smart money says, encourage your nonpaying renters to apply for Community Advocates or SDC ERAP funds. 

Rental Assistance Process | How to Apply for Rent Assistance | Community Advocates in Milwaukee WIor
Milwaukee Emergency Rental Assistance | Social Development Commission

There is an upside though to the moratorium ending, whether that end is next week or in three weeks, in that eviction, or the threat of eviction can be used to compel renters who refuse to apply for aid to do so.  Of course, there are also a few renters who are not paying and do not qualify for assistance because they have not been financially impacted by the COVID financial crisis. 

https://www.cnn.com/2021/06/03/politics/supreme-court-realtors-eviction-moratorium/index.html

The Realtor groups asked the justices to step in — on an emergency basis — arguing that “Congress never gave the CDC the staggering amount of power it now claims.”

They argue that the moratorium has resulted in “over $13 billion in unpaid rent per month.”

Apr 25

This one-hour Harvard webinar is a well-done,  “must watch”  if you are interested in the negative impact of the COVID economic crisis on housing. 
 https://www.youtube.com/watch?v=5Ke2xkZwwYA

Apr 09

HT Tristan Pettit

This WaPo article is a good read, should read piece. The bottom line is if the rent is paid evictions for nonpayment stop, eliminating the need for moratoriums.

There was a need for stopgap measures at the beginning. Today everyone would be best served by effectively using the money that is currently available to pay for the housing of people who truly are in need.

The idea is to get the money to renters before courts nationwide begin processing evictions again.

“We are running the Emergency Rental Assistance Program every day like we’re going to lose the moratorium tomorrow,” said a Treasury Department official, who spoke on the condition of anonymity to discuss the program before any formal announcements.

Washington Post The $50 billion race to save America’s renters from eviction

Dec 22


https://www.jsonline.com/story/news/2020/12/22/landlords-tenants-say-rent-assistance-needed-part-eviction-ban/3932908001/

“I  don’t think a landlord should be expected to shoulder the burden of taking care of a property for several months or a year,” when a tenant stops paying rent, said Dawn Anastasi, a landlord who owns 18 properties on the northwest side of Milwaukee. “It’s not the tenant’s fault, but it’s not the landlord’s fault either.”

Even with the rent assistance, landlords will be left holding the bag for much of the unpaid rent, predicted Tim Ballering, treasurer of the Apartment Association of Southeastern Wisconsin.

“The unpaid rent will never be paid, let’s be honest about that,” Ballering said, noting that even when a tenant is evicted the landlord seldom collects the past due rent. 

As a result, Ballering, who is also a landlord, predicted a spike in the number of local landlords who sell their properties to large absentee rental companies.

“Is that a good thing or a bad thing?” Ballering asked. “That depends on your views. Do you think that the small American farmer being driven out by large corporate farmers is a good thing?”

Heiner Giese, attorney for the association, said the $25 billion in rent assistance will be helpful though he agreed it would likely only last a couple of months.

Giese noted that the federal bill will allow landlords to file for rent assistance, unlike other rent assistance programs that require the tenant to apply

Giese, who is also a landlord, said he has seen cases where tenants signed the required CDC declaration that protected them from eviction but then did not apply for any rent assistance.

“They would just say he’s going to evict me anyway, so screw it,” Giese said.

Dec 20

How do landlords think unemployed people will pay rent?:

…an average of 8% of renters don’t pay rent in normal times. During the coronavirus crisis to date, that share has gone up to 15 to 20% of renters not paying.

“But generally, I think we need a better approach instead of just pitting owners versus tenants,” he says. Both the tenants and landlords need some larger, holistic fix from the government that acknowledges that there just isn’t as much money flowing through the system as there should be.

Nearly 12 million renters will owe an average of $5,850 in back rent and utilities by January, Moody’s Analytics warns. Last month, 9 million renters said they were behind on rent, according to a Census Bureau survey.   

The over $70 Billion in unpaid rent, as reported by Moody’s will cripple many housing providers and will cause a housing crisis that will impact both tenants and municipalities for years, if not decades.  In May of 2020 Milwaukee property values finally recovered from the 2008 Great Recession. 

Less than 2.5% of rent judgments are paid in Milwaukee County five years after the eviction.  And eviction judgments represent only a small fraction of the unpaid rent.  In surveying owners, we see on a high end 42% of their lost rent is included in eviction judgments, with most owners reporting less than 10%.  Some owners never pursue money judgments. So the million dollars a month in eviction judgments represent somewhere between $28.5 million to $100 million a year in money that should go into housing but does not.  I peg the number at least to be $48 Million a year in lost rent in one county.  This is just insane. 

The right answer is for the government to step up to the plate and create a portable housing voucher to cover a portion, to all, of the rent /housing costs for people below a certain income, similar to food stamps.

Instead, the government pits tenants against landlords in a zero-sum game where one must lose for the other to win. In the end, this makes housing more expensive or limits choices.

This has been a problem long before COVID. In 1991 I was interviewed by the New York Times on evictions. I asked the reporter, “On $574 a month, how do you buy tennis shoes for the kids, clean shirts for school, and still pay your rent?” Nothing has changed much since then. $574 was the AFDC (now W2) payment amount. Twenty years later in an NYT interview, my comment was basically the same:

“On $673 a month, how do you buy tennis shoes for the kids, clean shirts for school and still pay your rent?” Mr. Ballering said.” 
https://www.nytimes.com/2010/02/19/us/19evict.html 

Some suggest canceling mortgages and rents, thinking that this equivalent and will prevent the economic failure of housing.  Sadly, it will not.

The average mortgage payment is 36-39% of gross income. The average owner earns 7-9% of gross income for their investment of capital, financial risks, and physical efforts.  If you stop mortgage and rent payments, as well as prevent owners from being paid for their investment and efforts, there is still 52-57% of gross rent that is needed to cover other operating costs such as sewer, water, property taxes, maintenance, insurance, etc.

In Milwaukee, for most properties, the City takes a far bigger cut of the rent in property taxes, and sewer/water bills, than the owner gets to keep.

If you read the Brookings report, you will see this plus the “local economic multiplier” effect of wages and other monies expended by owners.

The Census Bureau reported in 2018 that, on average, every unit generates almost $1,200 in wages. Those wages, the property tax money, etc, circulate throughout the community many times over.

Here’s what scholars believe will happen if there is a moratorium without rental assistance; https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3641859 It goes into the economic impact on housing and the cost borne by other current and future tenants. It is an informative read.

Dec 19

I am hearing from more and more owners who are not paying their mortgages, utilities, and even fire insurance because they can’t, due to uncollected rent.  Maintenance was the first casualty.  

If you are facing similar problems and would be willing to share with your elected officials and or the media, please email me. Tim[at]ApartmentsMilwaukee.com

https://www.cnn.com/2020/12/17/success/landlords-struggling-rent-eviction/index.html

If landlords are struggling, tenants will also be affected as home maintenance slides.

“I’m seeing landlords who can’t pay for trash removal,” Gray said. “We’re getting ‘no heat’ calls. They aren’t paying real estate taxes. They aren’t paying their mortgage.”

For the typical landlord in trouble, which he said is someone who bought their property in the last five years and is leveraged to the hilt, there are no reserves. “Despite tenant protection laws, these landlords don’t have the cash reserves, nor the equity in their building to get loans,” he said. “With the moratoriums, they’re taking hit after hit.”

Some landlords, he said, are being paid less and seeing the wear and tear on their property increase as grown children or friends double up after losing their own housing. Routine maintenance that was supposed to take place this year has in some cases been delayed or canceled because landlords just don’t have the money, said Gray.

“They can legislate the need to do timely repairs,” he said. “But for many landlords, there is no money.”

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