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.

May 06

Evicting is so 2019.

You want the rent paid. The partners at the Rental Housing Resource Center have the resources to help your residents pay the rent. My company, Affordable Rental Associates, LLC, has adopted a mediation first policy as an alternative to eviction for a year now, with great success. Renters become current and do not move far more often than the court alternative.

If you are on the fence, look at how much that last eviction cost you in lost rent, repairs, court costs, time and aggravation. When it is all over, statistically you will collect less than 2.7% of your eviction judgment amounts over the next five years.

If you have questions, ask here, or email me directly.

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

Mar 07

The article linked below is so wrongly anti-housing provider. If the rent is paid, the need for free legal representation disappears in most cases. Discriminatory housing policies are not those of the property owners. We want our houses full as that is the only way we make money. Instead, for the most part, discriminatory housing policies were created years ago through government programs. But now, we are being made the scapegoat by the very governmental bodies that created this mess. 

Redlining of mortgages and insurance, leading to housing segregation or worse? These were federal government-mandated rules. https://en.wikipedia.org/wiki/Redlining

But articles like the one below try to paint property owners and managers as the causation. The truth is housing and renters must succeed for the other to succeed as well. We are two sides of the same coin. There are those who profit from encouraging conflict between owners and renters. This harms both residents and housing providers alike.

Contrary to the conclusion of the article, rental assistance is the solution. If the U.S. enacted a FoodShare for Housing program, where people below a certain threshold would receive portable housing vouchers, this would change many urban American problems. Multiple studies show the costs of such a program to the taxpayer are less than what we now pay for intervention when renters fail. 

Addressing extreme housing precarity requires more than rental assistance; it requires an overhaul of the system and redress of the longstanding discriminatory housing policies that led to this moment.

https://theappeal.org/the-lab/explainers/the-american-eviction-crisis-explained/
Jan 18

President elect Joe Biden proposes a $15 minimum wage claiming it will lift 1 million people out of poverty.

Clearly, it is not possible to pay current rents working full time at the current minimum wage. That needs to be addressed. I said similarly in New York Times interviews in 1991 and 2010:

“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.
($673 was the W2, WI’s welfare program, cash payment in 2010)

https://www.nytimes.com/2010/02/19/us/19evict.html

I do not think increased minimum wage is the answer though. Such programs will cause rapid inflation, leaving those making minimum wages in a similar position in a few years as they are today. A better answer is something like FoodShare for Housing, which addresses the needs without rampant inflation.

The person with some skills who is making $15 dollars an hour today is not going to accept the person with no skills making the same amount, they will demand more. Now that the former $15 an hour person is making $25, the one-time $15 an hour person will expect $40—this causing the costs of goods and services to rapidly increase.

The other factor is it will result in far less lower-paid jobs, as companies will move work overseas and automate all that can be done by a machine. But you can’t replace the hamburger flipper … oh wait, they just did. Miso Robotics Flippy robot for $30,0000 replaces 3-4 employees, produces better quality and works 100,000 hours between major servicing. 24/7 staff for 30¢ an hour, no overtime, no worker comp, no paid holidays, no calling in sick because there was a Packer Game last night…

At many fast food places, when you talk into the drive-through speaker, you are speaking to someone that is in an off-site call center. When was the last time you were at Home Depot or or the large grocery chain store that the checkout person was not you? 😉

The winners of the increased minimum wage programs will be people who own hard assets when the increase becomes law. THe more you own at the beginning of an inflationary cycle, the more you win at the end.

The biggest winners will be those with a fixed rate mortgage. Let’s say you own a $100,000 duplex with a $75k loan. Today you have $25k and 25% equity. Ten years at 7% inflation, and it is worth just shy of $200k. Now you have $125k and 62% equity, plus your principal paydown. If inflation hits 12%, you reach those numbers in 6 years.

Crazy- This will never happen. But it did. From 1973 to 1981, we saw an average of 9.25% inflation, with three years over 12%. Mortgage interest rates in 1981 were north of 18%. Interest rates were over 8% for the entire period of 1973 to 1992.

If they pass a new minimum wage, the smart answer might be to buy as much highly leveraged real estate as you can manage, unless, of course, the inflation it causes and the trillions spent on COVID relief crash the entire economy…

Jan 17

The overview of Jesse Tree is at https://www.jessetreeidaho.org/. The details of their Badge program are at https://www.jessetreeidaho.org/sign-up-for-workshops. They promote eviction prevention through rental assistance, mediation services, and working with property owners. A quote from their homepage:

It costs $1,000 on average for Jesse Tree to keep a family housed, compared to $5-10,000 for a family to find new housing after being evicted.

Evictions also result in significant costs to the property owner. TransUnion found in a 2014 study that “the true cost of an eviction can range from $3,500 up to $10,000” TransUnion infographic on eviction costs.

Between the cost incurred by the renter and the cost incurred by the property owner, as well as hidden costs incurred by the community such as the impact on MPS, evictions have a significant economic impact on the community

The Jesse Tree Badge workshops remind me of the 1990s UW-Extension “Good Neighbor/Good Tenant Program” for Milwaukee County residents.   HACM, Milwaukee County, and the City of West Allis provided the funding. It was a $52,500 County budget item in 1995. 

The UW program provided training to renters with evictions or no rental history. Renters that completed the program were given a partial move money grant. More importantly, the program had a rent guarantee for the first year of the tenancy that would pay a month of rent if the renter failed to pay. With what was in essence, two months security, owners were more likely to take a chance on a renter that would not otherwise meet screening criteria. Owners that participated had to offer certificate holders a special deal. I think most owners gave a 25/month discount if the rent was paid by the 5th.

My company was a participating owner in the Good Neighbor/Good Tenant Program. I considered the program successful.

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 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

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