Dec 30

Matt Desmond author of EVICTED often claims “the rent eats first.”

However, the truth is municipal governments are first at the table for that rent check, with their ever-increasing property taxes, sewer and water bills, those extras that are attached to the water bills as well as all the special assessments added to the tax bills.

Municipal governments also are the ones who will be paid even if you don’t and even ahead of the mortgage holder.

If rents increased year over year the same 9-286% as the city taxes, there would be rioting in the streets. There are a lot of news articles where there has been outrage at modest rent increases because that is not what one expects in an economic downturn.

However, owners will have to raise rents substantially to cover these tax increases. Add to that the reduction in rent collected many owners are experiencing this year and 8-20% rent increases will be required just to maintain the financial position of last year.

When costs exceeds the property’s income, the property will eventually fail. If this happens on a widespread basis, all tenants will be harmed and face much higher rents in the future.

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.”

Oct 05

Canceling rent will initially cause landlords to fail.  This will have a cascading impact on municipal budgets and local economies as contractors and vendors aren’t paid or given work.  Banks will suffer, but they’ll probably get bailed out again. 

Ultimately it will be the tenants who pay the greatest price as rents will increase dramatically due both to attempts by owners to cover the added debt they accumulated and the reduction in available rental housing.  
At the lower end of the housing market expect to see abandonment that leads to buildings being razed. At the mid market expect that well financed Wall Street corporations will buy up much of the housing stock. 2021 will make 2008 look like a small trial run.

Don’t expect to see much new residential rental construction.  Why would smart people invest in something the government can take away, without compensation, with the stroke of a pen.

Or of course, the Feds could do what is right and create a nationwide housing voucher that would protect both tenants and housing, as well as preventing the further collapse of the economy.   

Demand a fix

The National Apartment Association has an “Easy Button” to help you connect with your Congresspeople and Senators.


The National Multifamily Housing Council has a similar tool to reach out to your elected officials.

But don’t stop there.  

Even though most of the funding, if it comes,  will be Federal, reach out to your local officials as well.  Not only may they find state and local funding, many of these folks have the ear of the national political party bosses.  (It the national parties had leadership, the problems of not being able to pay rent would have been solved decades ago. – Just sayin’)


Why ‘Cancel-Rent’ Hasn’t Worked in The City That Tried It | Time

https://time.com/5889749/cancel-rent-ithaca/

While largely sympathetic to renters, who make up 73% of Ithaca’s residents, several members of the council worried about the well-being of small landlords as well. What happens to the landlords who still have mortgages to pay? What happens to contractors who are employed by those landlords? What happens to the city’s budget, which relies on those landlords paying their property taxes? “I don’t understand why we would want to take the pain and economic hardship of one group of our citizens and put it on another group of our citizens,” Ithaca Alderman George McGonigal said at the meeting. “We may create a bunch of problems for everybody in the community, including ourselves.”

Myrick saw the flaws, too. He too worried about Ithaca’s smaller landlords, in addition to the city’s already meager budget. “If you just cancel rent, there will be some landlords that lose money, there’ll be some landlords that lose so much money they can’t make their mortgage or tax payments, which could lead to defaults, and tax foreclosures would lead to less revenue for the city, which would mean we could support fewer social services,” he says. “This kind of thing can trigger [an economic] depression.”

Ultimately, after 30-plus minutes of contentious debate on June 3, the rent cancellation measure passed, on a 6 to 4 vote. The Ithaca Tenants Union, which coordinated with a couple city council members and Myrick to conceptualize the order, celebrated. “When your business is in providing people housing, that’s a certain responsibility you take on if it goes under to not put people on the street,” says Ary Stewart, a 24-year-old member of the renters coalition. If this results in landlords falling behind on their own debts, Stewart says they should “take it up with the bank.”

Sep 30

Residents may face higher property taxes after largest state reimbursement gap ever is reported

https://www.nbc15.com/2020/09/29/residents-may-face-higher-property-taxes-after-largest-state-reimbursement-gap-ever-is-reported/

MADISON, Wis. (WMTV) – Cities across the state are facing the largest gap on record in state reimbursements for costs that serve state facilities and some residents may face higher property taxes this year in exchange for the benefit of housing state properties.

The Wisconsin Policy Forum reported Tuesday that estimated municipal costs for services like police, fire protection and waste removal have risen sharply in the past decade, while state leaders have decreased funding for the program that provides reimbursement for such services.

Sep 12


https://shepherdexpress.com/news/features/the-new-eviction-moratorium-is-half-the-solution-but-is-it-e/#/questions

This issue will affect both parties. Heiner Giese, an attorney with Apartment Association of Southeastern Wisconsin (AASEW) says, “The question is, how are these people going to get paid? Will people lose their housing? What will landlords do in the meantime about municipal water bills, taxes, insurance or maintenance.”

Aug 15

HT: Joe Murray

https://www.governing.com/next/Legislative-Watch-Addressing-Americas-Eviction-Crisis.html

It’s an extraordinary dilemma, in which public health risks weigh so heavily that government is compelled to require forbearance from landlords and mortgage holders. While contagion may be held at bay, property owners are not the only ones who will suffer. Property tax revenue will be affected, and those who provide water and sewer service, gas and electricity will also feel the strain. 
 

Aug 10

https://www.pbs.org/newshour/show/could-federal-investment-prevent-an-eviction-crisis

DESMOND: In June, cities like Cleveland and Milwaukee saw evictions spike 30 to 40 percent above normal level when moratoriums expired.

[Ignores a greater than 30% overall decrease in 2020 evictions Year to date through June 30th. – Tim]

DESMOND: And it also doesn’t solve the landlord’s financial problems. You know, eviction right now, though, is kind of the only tool we’ve given to landlords, right? We haven’t seen a serious investment in housing from the federal government.

[Agreed – Tim]

DESMOND: And so when you’re a landlord and you’re in a pinch, you kind of reach for that pink slip.

[No landlord wants or wins when there is an eviction, rather they generally never recover the money lost. An eviction is either failure to screen or the tenant met with circumstances afterward. – Tim]

DESMOND: You know, we need a national moratorium on evictions. We need to say, look, in this pandemic, the home is medicine. The home is safety. And we have to protect that. Americans deserve that level of protection. Property owners need to pay their bills, too. And so we don’t just need moratoriums. We also need rent relief.

[There is no need for a moratorium if proper need-based rent subsidies are in place. Agreed that property owners need to pay their bills. The outcome if they can’t is chronicled at https://bit.ly/MoratoriumImpact – Tim]

DESMOND: We need a serious investment from the federal government with the recognition that everyone needs a stable, affordable place to live in normal times and especially during this pandemic. That’s true.

[Agreed – Tim]

Aug 08

The Virginia State Supreme Court extended yesterday the judicial moratorium on eviction proceedings for another 28 days. 

While it is VA, the arguments apply universally.

https://www.baconsrebellion.com/wp/no-equal-justice-for-landlords/

Justice Kelsey finds the following faults with the majority’s approach:

  • The judicial-emergency statute exists to help folks who can’t avail themselves of the courts, or to meet schedules or time deadlines. He concludes that “Exactly the opposite will be true under this ex parte order” (italics his). This order impedes a landlord’s access to the courts, even while the courts are capable of adjudicating their claims. The majority cited tenants who might suffer from health conditions that prevent them from coming to court. This dissent calls that an unwarranted generalization, one that landlords are powerless to contest on a factual basis in each case.

  • The legislature passed in April a bill that provides relief to tenants facing evictions, giving them an of-right 60-day continuance. That provision lasts as long as the Governor’s declaration of emergency does, so as Justice Kelsey points out, it’s still in effect. By entering this order, the court has stepped into the legislative and executive arena. He concludes, “Whether this legislative response to the housing crisis is adequate or not, we have no authority under separation-of-powers principles to issue an ex parte judicial order expanding the statutory remedy.”

  • Next, the dissent points out that this order singles out and targets one type of litigant: landlords. And it deprives those landlords of a remedy while doing nothing to prevent a tenant, even one who hasn’t paid rent since March, from suing the landlord for breach of some lease provision. Justice Kelsey argues that the order “rests on a wholly untested factual assumption,” namely, that tenants would have paid their rent but for the pandemic. What about those tenants who didn’t lose their streams of income? What about those who received alternative income streams, such as CARES Act payments? They get relief, too, and landlords have to sit on their hands and fume.

  • The dissent next notes three “constitutional concerns” that the order ignores. First, no one has the power to suspend the execution of generally applicable laws. But this one does that, hampering landlords to the benefit of tenants, in a specific class of cases. It matters not to Justice Kelsey that the judiciary, rather than the executive, is doing the suspending. Next, he posits something that I’ve mused about: This deprivation of a remedy may be a taking of private property for a public purpose, triggering a landlord’s right under Art. I, section 11 for just compensation. And third, this order at least appears to impair the obligation of contracts.

Jul 05

Vulnerable Renters Face Evictions -NYT

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.

May 24

The NY Mag has an excellent, sorry depressing, article about “Dr. Doom” Nouriel Roubini prediction of an extended depression.

In September 2006, Nouriel Roubini told the International Monetary Fund what it didn’t want to hear. Standing before an audience of economists at the organization’s headquarters, the New York University professor warnedthat the U.S. housing market would soon collapse — and, quite possibly, bring the global financial system down with it. Real-estate values had been propped up by unsustainably shady lending practices, Roubini explained. Once those prices came back to earth, millions of underwater homeowners would default on their mortgages, trillions of dollars worth of mortgage-backed securities would unravel, and hedge funds, investment banks, and lenders like Fannie Mae and Freddie Mac could sink into insolvency.

His predictions for 2020 are far more dire

A decade later, “Dr. Doom” is a bear once again. While many investors bet on a “V-shaped recovery,” Roubini is staking his reputation on an L-shaped depression. The economist (and host of a biweekly economic news broadcastdoes expect things to get better before they get worse: He foresees a slow, lackluster (i.e., “U-shaped”) economic rebound in the pandemic’s immediate aftermath. But he insists that this recovery will quickly collapse beneath the weight of the global economy’s accumulated debts.

Go read the article

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