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 25
Apr 09
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.
https://www.nytimes.com/2010/02/19/us/19evict.html
($673 was the W2, WI’s welfare program, cash payment in 2010)
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
“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 08
Before the COVID crisis, I was unaware that pre-filing eviction mediation was an option and only vaguely aware that mediation was an option during an eviction case. Many of our evictions resulted in stipulated dismissals, as do 46% of the evictions in Milwaukee County.
We learned of Mediate Milwaukee simultaneously through the Apartment Association’s collaborative work with Community Advocates, Legal Aid, and Legal Action; as well as my staff researching information for our tenant resource page at apartmentsmilwaukee.com/r/
Near the end of the moratorium, my company tried Mediate Milwaukee with two tenants that were three or more months behind in rent.
The resulting agreements were similar to what we would have accepted in a stipulated dismissal, with the added benefit of someone knowledgeable being there to help the tenant navigate funding options and assistance applications.
Based on our initial positive results, Affordable Rental Associates implemented a new internal policy. Before filing an eviction for non-payment, we refer the tenants to Mediate Milwaukee. Mediation first is now a standard business practice and will continue beyond the COVID crisis and moratoriums.
Pre-filing mediation benefits everyone.
- Tenants avoid having an eviction on their record, often with similar or more extended payment agreements than they would receive in a stipulated dismissal.
- Landlords benefit as they avoid the cost of eviction, and tenants who work with Mediate can better navigate funding options that allow them to stay in the unit, avoiding vacancies and rerenting costs to owners.
- The Court benefits by a reduction in caseload, many of which are ultimately settled by stipulation.
- We all benefit from the reduction in conflict. It was pleasantly surprising that some previously rude tenants became polite to my staff during mediation.
- Plus, tenants and owners who enter into mediation will avoid the need to debate in Court whether a CDC declaration is factual.
- Where needed, we have utilized Mediate Milwaukee to re-engage with tenants when issues arise with compliance with an agreement, often stabilizing the situation.
If mediation is explored early in the delinquency, there is little to no downside for the property owner. There are also, albeit lesser, benefits to both parties with post-filing mediation. Nonetheless, it can often result in a continued tenancy or at least a more agreeable move-out. While court-connected mediation will continue to be of value to all parties, the real opportunity for change is to promote pre-filing mediation as the first option to eviction for the Milwaukee rental owner community. It could cause a paradigm shift for the benefit of all.
The Apartment Association of Southeastern WI, which I’ve been a board member of for over three decades, has become a strong proponent of mediation benefits. We had a general membership meeting on October 1st to encourage owners to try mediation as an alternative to eviction.
There have also been many recent articles on the use of mediation for eviction prevention in other communities. One that I found interesting was https://citymonitor.ai/housing/what-is-eviction-mediation
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.
Dec 05
