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.”

Dec 13

The Apartment Association of Southeastern WI, with 24 other organizations, joined Milwaukee County Exec David Crowley in urging the Wisconsin Congressional Delegation to approve a meaningful relief package to ensure the viability of communities and housing.  

Moody’s was reporting last week that unpaid rent may reach $69.9 Billion by the end of this month, an amount that will devastate rental housing for years or decades. The only solution is Federal rental and economic assistance to help those who have lost their income due to the COVID economic crises. 

If after reading the letter included below, you agree with it, please write your Congressperson and Senator. It is easy using democracy.io


WISCONSIN COALITION SUPPORTS IMMEDIATE COVID RELIEF

December 9, 2020

Dear Members of the Wisconsin Congressional Delegation,

We write today to ask for your support in securing bi-partisan legislation that provides critical additional assistance to communities throughout our state, including local and tribal governments, businesses, non-profits, and first responders to address the ongoing public health and economic impacts of the COVID-19 pandemic.

We sincerely appreciate the previous three relief measures enacted by Congress and executive action by the President, However, the public health and economic impacts of the pandemic continue to grow. As a result, an immediate and unified response that provides additional support is critical to supporting efforts to contain the virus and mitigate the consequences of this unprecedented crisis.

As members of a diverse coalition of leaders in our state, we can attest to the severe economic and public health impacts facing our members, economies, and the communities we support. Without additional federal financial support, the immediate negative consequences will be significant, and will be compounded by severe long-lasting effects. Additional federal aid will enable a continued joint response from the public and private sector, and supporting partnerships between local governments, businesses, and their communities to mitigate the economic, health, and public safety impacts of COVID-19.

For example, Milwaukee County recognized the value of these partnerships early in the pandemic. In addition to direct virus mitigation and recovery measures, the County partnered with businesses and non-profits to address the collateral damage inflicted by the pandemic, especially to communities of color. This partnership resulted in Milwaukee County utilizing roughly one-third of its direct CARES Act allocation to immediately address housing and foreclosure needs, issue small businesses grants, and partner with community groups to address mental health and food assistance needs.

This unprecedented situation requires action at scale with the problem. Addressing the issue now with bold solutions will prevent larger systemic economic damage. To enhance the fiscal responsibility of this legislation, reasonable guardrails could require COVID-19 relief dollars be tied to the public health, economic, and community impacts of COVID-19, ensuring resources are utilized in the most effective and efficient manner possible.

As evidenced by the diversity of the groups who have signed on to this letter, the effect of delaying further relief will have second- and third-level impacts on business, property owners, and a multitude of other industries throughout the state.

We sincerely appreciate your earlier efforts to assist our communities in addressing this crisis. However, we request further action – a bi-partisan solution that provides additional resources to address the public health and economic impacts of this pandemic. Our businesses, employees, and communities depend on the continued support of our federal government in these trying times.

Respectfully,

Apartment Association of South-Central Wisconsin, Inc.
Apartment Association of South Eastern Wisconsin, Inc.
Children’s Wisconsin – Milwaukee Hospital
Commercial Association of REALTORS Wisconsin
Community Advocates, Inc.
Cooperative Network
David Lubar
Feeding America Eastern Wisconsin
Greater Milwaukee Committee
Manpower Group
League of Municipalities
Legal Aid Society of Milwaukee
Metropolitan Milwaukee Association of Commerce
Milwaukee County Commission on Aging
Milwaukee County Executive David Crowley
NAIOP Wisconsin
Potawatomi Tribe
Visit Milwaukee
Wisconsin Apartment Association
Wisconsin Bankers Association
Wisconsin Counties Association
Wisconsin Credit Union League
Wisconsin Mortgage Bankers Association
Wisconsin REALTORS Association
Wisconsin Restaurant Association

Dec 11

If any of you would like to be interviewed for this project, please reach out to Nick or I.

Tim Ballering Tim@ApartmentsMilwaukee.com
Nick Sakalis realestateplateradio@gmail.com>

I wanted to share these videos just in case you haven’t seen them yet. Let me know your thoughts.

https://youtu.be/pf_bcZrHI88

In the meantime there is a channel dedicated to collect all landlord related videos throughout YouTube in one place. We’ve already assembled a fair amount of content and adding to it everyday. Yours could be next. 😉

This is the link:

https://youtube.com/channel/UCOL_3jEcndU3kxKCjyXqM6g

Dec 06

A member wrote on the free Apartment Association listserv wrote:

I have a single family in Milwaukee county that the tenants are late almost every month. Usually I work with them but they haven’t been answering my calls. Can I give a 5 day notice to pay or vacate?
I’m not really sure what’s legal with the eviction moratorium.

CARES ACT: If the property has a federally backed mortgage or you are receiving Section 8, you are probably prohibited from serving a notice until at least 1/1/21. You would need to serve a 30 day notice for any money due in 2020.

CDC Moratorium: Judge Conley, who is in charge of evictions in Milwaukee County, has recently ruled that the moratorium does not prohibit serving a notice or filing an eviction even if you received the CDC Declaration.

If your property is not covered CARES or CDC you can serve notices and file evictions.

But … Have you considered attempting meditation?

We tried pre filing mediation before the WI moratorium ended. In our experience it delivered results similar to what you would get in a stipulated dismissal, but with far less confrontation and the added benefit of the mediator helping the tenant apply for assistance. We had a number of cases that would have resulted in displacement, but were positively resolve because of mediation.

In fact this has worked so well that we implemented a policy that we attempt mediation for all non payment situation prior to filing. Our company policy of pre filing mediation will remain in effect even after the COVID crises ends, because it works.

Mediate Milwaukee 414-939-8800 or emailing apply@mediatemilwaukee.com.

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

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