Retail Store And U.S. Household Evictions Skyrocket Due To Missed Payments
As the economic fallout from the coronavirus pandemic continues, almost one-third of U.S. households, 32%, have not made their full housing payments for July yet, according to a survey by Apartment List, an online rental platform. Retail Store And U.S. Household Evictions Skyrocket Due To Missed Payments
That’s the fourth month in a row that a “historically high” number of households were unable to pay their housing bill on time and in full, up from 30% in June and 31% in May. Renters, low-income and younger households were most likely to miss their payments, Apartment List found.
In April, May and June, the majority of missed housing payments were made by the end of month, Apartment List reports. Almost 90% of households had paid some or all of their rent or mortgage payment by the end of June. But with late fees tacked on, those households may be more likely to miss their next housing bill, perpetuating a vicious cycle.
“Delayed payments in one month are a strong predictor for missed payments in the next,” Apartment List says. While 83% of households who paid their May housing in full and on-time also did so in June, only 30% of households who were late in May did so in June.
Worries About Evictions Mount
States started to reopen their economies last month, but spikes in coronavirus cases led many to re-close sectors or pause reopening plans altogether.
“The economic fallout from the pandemic does not appear on track for the quick V-shaped recovery that many had originally hoped for,” reports Apartment List. Plus, the continued coronavirus recession has more Americans worried about evictions and foreclosures, Apartment List found.
Renters are especially vulnerable. About 36% of renters, who are more likely to work in industries devastated by the coronavirus, missed their July housing bill, compared to 30% of homeowners.
The federal eviction moratorium, which covers around one-fourth of renters in the U.S., put in place at the beginning of the pandemic has been extended to the end of August. But many people are still worried about an imminent wave of evictions across the country, as tenant protections vary greatly depending on the state and even city. Many — though not all — states and cities have instituted their own eviction bans; some have already expired, leaving tenants vulnerable at a time when coronavirus cases are increasing in many spots in the U.S.
Many households have already spent their one-time stimulus check, and the extra $600 per week in unemployment insurance — used by many to cover essentials like housing — runs out at the end of July. That means even more households could potentially miss their rent or mortgage payments in coming months.
Housing advocates are calling for a uniform, nationwide eviction moratorium that covers all renters, as well as other federal aid in the form of emergency rental relief. The House or Representatives has passed several measures, including the Health and Economic Recovery Omnibus Emergency Solutions, or HEROES, Act and the Emergency Housing Protections and Relief Act of 2020, to address the housing crisis. Neither bill is expected to pass the Republican-controlled Senate.
Eviction Looms For Millions of Americans Who Can’t Afford Rent
Federal eviction moratorium expires in July, along with enhanced jobless benefits; Congress debates extensions.
Millions of Americans who have missed rent payments due to the coronavirus pandemic could be at risk of being evicted in the coming months unless government measures to protect them are extended, economists and housing experts say.
Nearly 12 million adults live in households that missed their last rent payment, and 23 million have little or no confidence in their ability to make the next one, according to weekly Census Bureau data.
About a third of the country’s renters are protected by an eviction moratorium that covers properties with federally insured mortgages. That expires July 25. Many renters are jobless and depend on supplemental weekly unemployment benefits of $600 that are due to end on July 31.
A number of cities and states have broader protections that will remain in place longer. Boston has banned evictions from public housing through the end of the year. Pennsylvania recently extended its moratorium against evictions for nonpayment of rent until Aug. 31.
The White House is negotiating with Republicans and Democrats in Congress to pass another round of economic relief during the last week of July. Treasury Secretary Steven Mnuchin has said supplemental jobless benefits have created a disincentive to return to work as the economy starts to reopen and should be reduced.
House Democrats voted in May to expand the eviction moratorium to cover all residential dwellings and extend it by a year. The bill included an extension of enhanced jobless benefits and $100 billion in rental assistance. The office of Sen. Mike Crapo (R., Idaho), chairman of the Senate Committee on Banking, Housing and Urban Affairs, declined to comment on any GOP plan to keep people in their homes because negotiations are under way.
Paying rent is a struggle for Americans whose jobs evaporated when government-imposed lockdowns closed businesses ranging from barber shops and restaurants to stores and fitness centers. More than 18 million people were receiving unemployment insurance during the last week of June.
“They all had jobs, and they had economically viable jobs, but we told them they couldn’t work—to protect us—and now we’re going to kick them out of their houses,” said Shamus Roller, executive director of the National Housing Law Project.
Depending on the jurisdiction, landlords must give notice if they plan to evict tenants, often 30 days in advance. Housing experts say some landlords are willing to offer flexibility to tenants in financial distress, given the difficulty of finding new tenants in a downturn, and about 1.5 million adults had their last rent payment deferred, according to census data. But such help isn’t always available.
Among those at risk of eviction is 58-year-old Aileen Collins of Dallas, who says she didn’t start receiving unemployment benefits until eight weeks after she lost her job at a nonprofit in March.
After missing a rent payment in April, she said she was threatened with eviction from her two-bedroom apartment. She got a reprieve when she showed the manager that the building’s mortgage was covered by the federal moratorium.
Without extra jobless benefits, Ms. Collins said her income would go down to $200 a week—from about $800 when she was working—too little to cover monthly living expenses of $2,000. Her savings will last two months, and Ms. Collins fears becoming homeless again, an experience she lived through eight years ago.
“Some days, I sit up here and I just watch the news, and I say, ‘Where’s the plan?’ There’s no plan,” she said.
Molly Lynch of Henderson, Nev., is worried her family will be evicted when the state’s moratorium is lifted on Sept. 1. Ms. Lynch has a 5-year-old daughter and is due to have a baby in November.
“I can’t go back to work because she’s not in school; the schools are closed,” Ms. Lynch said. “So I don’t see how we’re supposed to get out of the hole we’re in.”
Ms. Lynch and her partner, a forklift driver who was laid off in March, fell behind on their rent in April after the state’s backlogged unemployment system failed to pay him benefits, she said.
Ms. Lynch’s family has managed to get by, thanks to an inheritance from her grandmother. But that won’t last more than a few more months. If the inheritance is used up before some form of government protection kicks in, she said, “we would be living in our cars, which is also illegal in the state of Nevada.”
“If we have an eviction on our record, nobody’s going to rent to us,” she said.
Homelessness rises with unemployment, according to a model by White House economist Kevin Corinth, based on data from the 2007-09 downturn. He found that each percentage-point increase in the unemployment rate forces about 21,500 people nationwide into homelessness. The U.S. jobless rate in June was 11.1%, up from 3.5% in February.
“The obvious next question is: How is this time different from then?” said Brendan O’Flaherty, a Columbia University economist. “The moratoria and pandemic unemployment insurance are one part of the answer,” he said. “But we don’t know what’s going to happen to them in a couple of weeks.”
Researchers at Princeton University’s Eviction Lab documented a sharp decline in eviction filings from March to April in the 11 cities they track after the federal moratorium and many state-level bans took effect.
Evictions have since begun to creep up in cities where state moratoriums have expired, the group’s data show. Eviction filings in Milwaukee shot up to 1,447 in June, after Wisconsin’s moratorium expired, from 61 in May.
“Milwaukee may be the canary in the coal mine,” said Alieza Durana, a spokeswoman for Eviction Lab.
Even with eviction protection and unemployment benefits, Americans like Jeffrey Lello, 42, have fallen through the safety net. In late March, his hours at the Outback Steakhouse where he waited tables in Orlando, Fla., were reduced to zero because the franchise closed its dining rooms.
He soon burned through his savings and filed for unemployment benefits. So far, he said, he has received just one week’s worth of benefits totaling $875.
Mr. Lello said he had to leave the townhouse he shared with housemates because he was behind on his share of the rent. For the past several weeks he has lived in a tent in a wooded area near a food bank.
Elizabeth Watts, a spokeswoman for Bloomin’ Brands Inc., which owns the Outback Steakhouse brand, said Mr. Lello was told the company would “support him and help him however we can until we can get him back to his normal hours.” She said the company had provided “relief pay” and several free meals.
“People meet me now and they’ll see that I’m unemployed and they’ll see that I don’t have a place to live, and then they’ll make judgments about who I am now,” Mr. Lello said, adding that he sees himself as a responsible, hard worker. “I know who I am. But nobody sees that anymore.”
Why Houston Apartment Evictions Are Mounting
Courts in Houston are overloaded with eviction filings after local moratorium expired in May; end of federal protections could lead to more.
It was 9:07 a.m. when Cammessia Mitchell started banging on a courtroom door in Southwest Houston.
She thought she was early for her June eviction hearing. Minutes later, she learned that her landlord had already won the case. She is appealing the decision next month, but if she loses Ms. Mitchell could be kicked out of her home of 14 years because of the rent payments she has missed during the pandemic after losing her job.
“The fight started when I said ‘Can you have a little more compassion,’” said Ms. Mitchell.
With expanded unemployment benefits and a federal eviction moratorium covering millions of apartments both expiring Friday, more than 11 million Americans could be served with eviction papers over the next four months, according to global advisory firm Stout Risius Ross, LLC, which analyzed Census data on unpaid rent.
Houston is expected to suffer many more evictions than most major cities. That is because unlike in New York, San Francisco and even other cities in Texas, Houston has stopped providing protections at the local level, after a statewide eviction moratorium expired in May.
Tiffany Thomas, a Houston councilmember, said the city is counting on more rental assistance from Congress to stop the wave of new filings. But hundreds of Houston renters not covered under the federal measure have already been served with eviction papers each week since the state’s eviction protection expired.
“This thing is already out of the gate and we’re already trying to put the water back in.” Ms. Thomas said.
Ms. Thomas represents parts of Southwest Houston, the largely Hispanic and Black section where Ms. Mitchell lives and one of the city’s most vulnerable neighborhoods to mass evictions. Its major thoroughfares are dense with working-class apartment complexes, and it has the highest renter population in the city, according to an analysis from Houston-based data science firm January Advisors.
The area has seen more eviction filings than most other parts of town over the past several weeks. Legal aid attorneys say they have noticed long lines at courthouses, sometimes people standing shoulder-to-shoulder.
Across Houston, eviction filings more than doubled in June compared with May, according to Princeton University’s Eviction Lab, which tracks evictions in several U.S. cities. The 2,483 evictions filed in Houston last month are fewer than what the courts typically see in June. But with courts just now processing cases again, and the expiration of the federal eviction moratorium, housing attorneys and tenant advocates expect evictions could soon surpass historical averages.
Houston’s mayor, Sylvester Turner, hasn’t put an extended eviction moratorium on his agenda and has instead said the city needs more federal financial assistance to address the problem. In April, Mr. Turner signed a letter asking local judges to halt eviction proceedings until August.
Evictions in Houston are rising as Covid-19 cases there are also surging. On July 17, Harris County, which includes Houston, recorded its highest seven-day average for new cases during the pandemic, with 1,650 confirmed cases, according to the data from the Texas Department of State Health Services. Southwest Houston ZIP Codes have some of the highest case counts in the entire city.
Advocates say eviction is a risk factor for virus transmission because it leads to overcrowding, as the evicted then turn to friends or family for temporary accommodations, causing people to double up in small apartments. The Centers for Disease Control and Prevention has cited “poverty and crowding” as one of the top significant risk factors for severe Covid-19 illness.
Some policy makers and landlords remain skeptical that extended eviction bans will solve the problems Houston’s renters are facing. They argue that in addition to hitting the pockets of property owners, eviction delays don’t address the issue of unpaid rent for tenants.
“You’re just kicking the can down the road and just letting the problem grow bigger and bigger for the resident,” said John Boriack, president of landlord Veritas Equity Management and president-elect of the Houston Apartment Association, a trade group.
The Houston Apartment Association has been lobbying both local and federal government to provide more direct financial assistance to renters, Mr. Boriack said.
Greg Travis, a local City Council member who said he represents Houston’s wealthiest district, said that instead of banning evictions across the board, the courts are best-equipped to deal with the varying intricacies of eviction matters. “Every situation is unique. Not every eviction is because you’re not paying rent,” Mr. Travis said.
Most tenants don’t have legal representation in eviction proceedings and don’t file appeals of their evictions. After receiving an eviction notice, tenants often decide to leave their homes before even going to their own eviction hearing, tenant attorneys said. That is partly because in Houston there is no legal defense for unpaid rent. Defendant tenants who can’t pay at least one month’s rent into the court registry automatically lose.
“These cases move very fast,” said Houston attorney Velimir Rasic, who is representing Ms. Mitchell in her eviction case. “If you don’t appeal within five days there is no further recourse.”
To protect more tenants from evictions during the pandemic, some cities have chosen to use funding from the federal coronavirus stimulus to pay for legal representation. Those cities include Atlanta, Chicago, Baltimore and Detroit.
Ms. Mitchell, who has applied for unemployment benefits but has yet to receive them, appealed her eviction by asking family to help her pay the required one month’s rent into the court registry. There is no date set for her hearing yet, but it will likely occur sometime next month.
Although there is typically no defense for unpaid rent in Texas, Mr. Rasic plans to argue that Ms. Mitchell shouldn’t be evicted because of “impossibility of performance” during the pandemic.
“You’re very limited in how you can fight these cases,” Mr. Rasic said of the legal approach. “It’s still very new. I don’t know how successful it will be. But it’s the best we have right now.”
Retail Eviction Proceedings Pick Up As Economy Restarts
Some tenants, particularly those from apparel, fitness and theater sectors, continue to struggle with rent payments even as coronavirus shutdowns lift.
Proceedings for the eviction of retail tenants are picking up across the country as courts reopen and states’ moratoriums on evictions are expiring or getting curtailed as the economy reopens.
In Miami, a luxury-shopping-center landlord began legal proceedings to evict Saks Fifth Avenue two weeks ago for nonpayment of rent amounting to $1.9 million as of early July.
In other parts of the country, smaller retail landlords also have filed lease termination and eviction notices to restaurants, bridal shops, entertainment operators and co-working tenants that haven’t paid rent and weren’t able to come to mutually agreeable modifications to their leases.
Before the pandemic, most of these disputes end up getting resolved before the sheriff throws them out, but lawyers said they are seeing higher volumes of disputes which could lead to more evictions.
“We hope and think that the outcome of the lawsuit is that Saks would come to its senses and pay its rent in full. If Saks still doesn’t do so, we’ll have a whole host of other options for the space,” said Matthew Whitman Lazenby, chief executive officer of Whitman Family Development, a private company that owns the ritzy Bal Harbour Shops in Miami.
Saks Fifth Avenue has a ground lease with the outdoor mall and pays percentage rent, or a percentage of sales as rent. Compared to fixed rents, such lease structures already have built-in protections if sales fall.
“It’s perplexing,” said Mr. Lazenby. Bal Harbour Shops was closed from mid-March until the third week of May, and Saks Fifth Avenue recorded stronger sales in June this year compared with last year, he said.
“Unlike the majority of our landlord partners, Matthew Lazenby and the Whitman family have not acted in good faith.
Not only have they chosen not to adequately assume their fair share of the damages created by the global health crisis still gripping our nation, they have used the press and legal system to bully tenants,” said a Saks Fifth Avenue spokeswoman, adding that the company has been able to work with other landlords “to amicably and logically share the losses incurred during the pandemic.”
“For many years, Saks has been a significant part of the success of Bal Harbour Shops, and we expect to continue to be part of that success for a long time to come,” the spokeswoman added. The luxury-department-store operator, whose parent company Hudson’s Bay Co. went private in early March, had a hard time before Covid-19 competing with online upstarts and other rivals.
While overall retail rent collections have improved to 77% in July from around 54% in April, some tenants, particularly from the apparel, fitness and theater categories, have continued to struggle with payments, according to data from Datex Property Solutions, a real-estate data firm that tracks rent collection on thousands of properties across the country.
During the coronavirus-shutdown period that started mid-March and extended to as late as August in some cities, tenants have implored their landlords for deferrals and lower rents to stay in business.
States also imposed moratoriums on commercial-real-estate evictions, which offered temporary respite until they expire. New York Gov. Andrew Cuomo extended the state’s moratorium until Sept. 20 from a previously extended Aug. 20 deadline.
Landlords said they have modified tens of thousands of leases over the past few months, including deferrals or discounts in exchange for lease extensions or other concessions, such as the removal of clauses that prohibited certain types of tenants in the neighboring space, such as direct competitors or other uses of common-area space. But for some, negotiations reached a stalemate and landlords said they have no choice but to resort to litigation.
“It’s an unfortunate but necessary tool to enforce the lease,” said Derek Waltchack, partner at Shannon Waltchack, a real-estate landlord based in Birmingham, Ala., with more than 400 tenants across 64 properties. “We also have to balance the expense of securing new tenants versus working with our tenants and providing some rent deferrals.”
Mr. Waltchack said his firm has taken legal action against more tenants for missed rent payments, mostly bars and restaurants, compared with a year ago. He added that the majority of his tenants would subsequently pay the rent late rather than get evicted.
He said his firm lost 10 tenants, mostly bars and restaurants, due to the Covid-19 pandemic.
In Minneapolis, Eric Ruzicka, a partner at Dorsey & Whitney LLP, said his law firm has commenced around 30 eviction filings for commercial tenants, including restaurants, children’s play zones and bridal shops that were hurt by the drop in tuxedo rentals for proms.
He expects most cases to be resolved before trial and that many of his landlord clients still have a desire to work things out. So far, only one, a restaurant, has an eviction trial date set for late September.
“Landlords need to figure out which tenants are going to thrive and make the center better and which ones have been struggling already,” said Mr. Ruzicka. “If it was a good relationship before coronavirus, it’s a salvageable relationship.”
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More Homes Are Going Dark As Moratoriums On Utility Shut-Offs End
Utility companies say they can’t afford indefinite halts to shut-offs without raising prices for all customers.
Latoya Dandridge was laid off from her school cafeteria job in March during the coronavirus shutdown. Six months later, she is now anxiously waiting for the moment when her electricity will be shut off.
In North Carolina, where Ms. Dandridge lives, a moratorium on utility disconnections ended Sept. 1. Similar reprieves imposed during the pandemic are ending in more states, putting more people at risk of losing access to water, electricity and gas as they struggle to find work or are quarantined at home.
Ms. Dandridge, 36 years old, said her unemployment insurance payments, which she applied for in June, have yet to arrive. Her electric bill, unpaid for months, is now $600. A sister is helping her make car payments, but there is no more money left to borrow.
“It may be a week. It may be the end of the month,” said Ms. Dandridge, whose four children take classes on school-issued laptops in her apartment in Fayetteville. “I don’t know when they’re going to turn it off.”
Since the pandemic started, 36 states have issued moratoriums on utility shut-offs for people who couldn’t pay their bills. In other states, utility companies voluntarily stopped disconnecting customers who fell behind.
Between now and mid-October, an estimated 24 million households are set to lose protections as moratoriums end in nine states—they have already expired in 14 states—leaving 13 in place, according to an analysis of state moratoriums by Carbon Switch, an energy efficiency startup. Moratoriums are currently set to expire in Texas at the end of September, Virginia on Oct. 5, and Washington on Oct. 15.
Utility companies say they can’t afford to halt shut-offs indefinitely without raising prices for all their customers.
“Every utility in the country is facing the same situation,” said Chris Eck, a spokesman for FirstEnergy, which serves 6.1 million customers from Maryland to Ohio. “It’s rather unprecedented. We have to balance the needs of customers with what makes the most sense to keep the lights on.”
Duke Energy, which has 7.7 million customers from Florida to Ohio, plans to resume disconnection notices between September and December in different states. In late August, the number of people behind on payments was only about 4% higher companywide than last year, but many customers owe more than usual. For example, in Florida, customers with accounts overdue by 60 days or more owed nearly $15 million in June, compared with just over $1 million in June 2019.
However, Barbara Higgins, Duke’s chief customer officer, said the company expects to disconnect fewer people than it typically would, because the company is helping customers find outside financial assistance, waiving fees and offering new payment plans, among other changes.
“It’s in nobody’s interest to have a large number of customers default,” she said.
California, Illinois and Massachusetts all recently passed measures intended to protect utility customers, such as extending moratoriums, debt forgiveness and waiving reconnection and other fees.
But the debt burden is growing in many states. In Massachusetts, the amount of money owed by utility customers through July was $200 million more than through the same time last year, according to reports filed by utility companies. More than 10,000 customers were 90 days or more behind in payments.
“Arrearages are going through the roof,” said Charlie Harak, a Boston-based attorney with the National Consumer Law Center, which advocates for low-income residents.
Before the pandemic, one-third of the U.S. population faced difficulty paying utility bills, according to the group. The federal stimulus this spring provided $900 million for the Low Income Home Energy Assistance Program, known as LIHEAP.
Advocates for low-income residents say the funding won’t be enough to cover utility payments people owe. Losing utilities often causes people to live in dangerous conditions. During the pandemic, that could mean crowding more people into homes, low-income-housing advocates say.
For people who live in federally subsidized housing, nonpayment of utilities is frequently a lease violation that leads to eviction. Many states already bar providers from disconnecting service during the winter. Some advocacy groups are calling for states and companies to extend moratoriums through the winter.
Payment plans to avoid shut-offs often require customers to pay a portion of the past-due bill on top of a current bill, which advocates say isn’t practical for many people unemployed during the pandemic.
Yet some low-income advocates say extending moratoriums is a double-edged sword. If they last until spring, some customers could have a year’s worth of unpaid bills that it will be even harder to pay.
Nonprofits have stepped in to help customers. Denise Holmes, 58, of Jeannette, Pa., said Catholic Charities paid $108 in July to keep her gas connected. But she has a $165 sewage bill due Sept. 30 with the water authority in Westmoreland County. “I do not know what I’m going to do,” she said. “I’m scared, to put it bluntly.”
In North Carolina, just over 1 million out of 8 million electricity customers had accounts 30 days or more overdue as of the end of July, up 30% from last year, according to state data.
Derrick Fourong, 46, of Elm City, N.C., said his electricity was shut off earlier this month after he was unable to pay $150. His carpentry business, which he runs out of a shop at his home, has suffered during the pandemic, he said.
For several days, Mr. Fourong wasn’t able to draw water from his well and used rainwater to flush his toilet. He borrowed $250 from a friend to get power turned back on. Now he owes his friend money, and his next bill is due in mid-October.
“I’m still in the hole,” he said.
Landlords Staring Into Retail Abyss Need More Than A Vaccine
U.K. retail landlords are facing a hard reality: the rapid approval of a vaccine has come too late for thousands of their stores.
The collapse of department store chain Debenhams Plc and Philip Green’s Arcadia Group this week caps an unremittingly brutal year for the owners of brick and mortar stores. The demise of these retailers alone threatens 16.6 million square feet (1.5 million square meters) of real estate, according to data compiled by Radius Data Exchange.
Nearly double that amount of retail space has already been permanently shut this year in the U.K. — the equivalent of almost 500 American football fields.
Debenhams and Arcadia “were not so long ago considered anchor tenants,” said Rob Virdee, an analyst at real estate research firm Green Street Advisors. “The resulting large voids inside shopping centers will reduce even further the little negotiating power landlords still clung on to.”
Crisis enveloped the U.K.’s high streets well before the pandemic, but the combination of both has proved a lethal cocktail for retailers and landlords alike.
Once the bedrock of institutional investors’ property portfolios, the reliable cashflow from malls and stores has become a dripfeed as lockdowns sped a structural shift to online shopping. More than 20,000 U.K. stores are forecast to close this year, predicts the Centre for Retail Research.
Women’s fashion retailer Bonmarche Ltd. also filed for administration Wednesday, putting more than 225 further stores at risk.
The spike in vacancies has pummeled some of the biggest landlords: Intu Properties Plc collapsed in June after years of struggling under the weight of its debt; Hammerson Plc, the U.K.’s largest specialist retail landlord, was forced into an emergency share sale; and global mall giant Unibail-Rodamco-Westfield is scrambling for a new rescue plan after activist investors defeated management’s proposals.
Most of the biggest listed owners are exposed to Arcadia and Debenhams. Hammerson rents 16 stores to the former and two to the latter, according to Green Street. British Land Co. and Land Securities Group Plc, which own malls as well as offices, each have 10 Arcadia stores and 3 leased to Debenhams. The collapses just add to the firms’ woes: their stocks have tumbled this year, with Hammerson faring worst after slumping more than 80%.
The share-price plunges that have plagued U.K.’s real-estate companies since the start of the pandemic have lured a slew of bargain hunters, with private equity funds snapping up stakes in companies including Great Portland Estates Plc and British Land.
U.S. investors, led by private equity firms sitting on vast piles of ready cash, will spend about $10 billion on U.K. real estate next year, according to a September report from broker Knight Frank.
So far, they’re steering clear of retail — despite the large discounts on offer. A large U.K. shopping center has yet to change hands this year, while Intu failed to find backers for a rescue bid. Still, the breakup of Intu and the sale of its assets including the Trafford Centre in Manchester will provide a litmus test for the depth of demand. The mall’s sale process has so far failed to lure bids above the level of the debt secured against the property, Bloomberg reported last month.
Publicly traded U.K. retail landlords covered by Green Street have seen total returns down 47% since February, the worst of any property type. A rare bright spot has been warehouses, where landlords have benefited from a boom in demand from retailers selling online, delivering gains of 5% even as the pandemic hammers the wider economy.
“The virus has accelerated everything,” said Andrew Jones, chief executive officer of landlord LondonMetric Property Plc, which used to invest mainly in retail but switched to warehouses several years ago. “We’ve seen several years worth of value destruction condensed into a few months.”
U.S. Poised For Wave Of Evictions In January As Federal Ban Expires
Between 2.4 million and 5 million American households are at risk in January alone.
Millions of U.S. renters face the prospect of eviction in January unless federal officials extend protections put in place during the Covid-19 pandemic.
That month is when the Centers for Disease Control and Prevention’s ban on evictions is set to expire. The moratorium protects tenants who have missed monthly rent payments from being thrown out of their homes if they declare financial hardship.
The CDC ordered the halt on evictions under the Public Health Service Act, which allows the federal government to enact regulations that help stop the spread of infectious diseases.
Between 2.4 million and 5 million American households are at risk of eviction in January alone, and millions more will be vulnerable in the months after, according to estimates from the investment bank and financial-advisory firm Stout Risius Ross.
While several states and cities have their own eviction bans with varying rules and expiration dates, the CDC order is the only one that covers the entire country.
Housing-industry executives said they expect the CDC eviction ban to be extended. Many landlords said they believe they are more likely to recover some rent by working with tenants than by evicting them.
While many states have enacted eviction moratoriums, the CDC order is the only protection for renters in some cities. Attorneys and judges said they expect courts to be overwhelmed once moratoriums end, creating a monthslong backlog of cases.
Yet in many cities and towns, the legal process is under way. While the CDC order helps keep renters in their homes, it doesn’t prevent landlords from beginning the eviction process in court.
Since the CDC eviction moratorium went into effect in September, building owners in places like Plano, Texas, and Milwaukee, have taken tenants to court through videoconferencing.
Landlords have already filed more than 150,000 eviction petitions during the pandemic in the 27 cities tracked by Princeton University’s Eviction Lab. Many of those tenants have lost their cases, and are now on the hook for all their back rent.
Some failed to qualify for the moratorium because they didn’t sign a declaration of their inability to pay, or because their landlord challenged their claim to financial hardship. Some renters have then had to leave their homes despite the ban being in place.
Evicted renters are still liable for months of unpaid rent. Moody’s Analytics said it estimates U.S. tenants owing as much as $70 billion in back rent by year-end.
John Pollock, staff attorney at the Public Justice Center, a legal advocacy nonprofit, said that if the moratorium isn’t renewed, January is expected to be the worst month for evictions in American history. “I don’t see how it’s possible that we’re not going to see more evictions on Jan. 1 than we’ve ever seen in a month,” he said.
Evictions stress cities where the pandemic already has weakened social-safety nets, housing advocates say. Studies show they also worsen the health crisis. New research led by an epidemiologist at the University of California, Los Angeles, found that the expiration of local eviction moratoria was associated with more than 10,000 excess deaths from Covid-19, potentially due to increased disease transmission from dislocation or homelessness.
The dollar amounts of unpaid rent in eviction cases astonish even some veteran judges. Justice of the Peace Michael Missildine of Collin County, Texas, said he was issuing judgments against tenants owing more than $10,000 in rent payments. In the past, a typical ruling would be a fraction of that sum.
“It’s not normal,” Judge Missildine said during a video hearing. “They’re getting large very quickly, and it’s very scary to see,” he added, referring to rent-debt figures.
Some landlords say they have offered installment plans or taken other steps to accommodate struggling tenants, but now have gone months without collecting rent. They are blocked from taking control of their property by what they consider overly restrictive local and federal laws.
Korvall Li in Seattle said he hasn’t seen a rent check since January from a townhouse tenant who makes a six-figure salary. That is a deficit of about $30,000. Mr. Li said he has continued his mortgage payments and is suing the state and city over eviction protections that exceed the federal moratorium.
“I already decided that I’m not going to be a landlord in the future,” Mr. Li said. “It’s really turned me off the whole real-estate thing.”
Those behind on their rent during the pandemic are disportionately minorities, according to recent survey data from the Census Bureau. Nearly a third of Black renters and 18% of Hispanic renters said they were behind on rent last month. About 12% of white renters said they weren’t caught up on their rent payments.
Julie Watts, a Dallas wholesale worker who has been out of a job since the spring, has missed her $1,003 rent bill many times but kept her apartment because of the eviction ban. She is due to enter the hospital this month for an ailing kidney.
“I’m afraid to leave my apartment because I don’t want to come home from the hospital and find out my stuff is in the parking lot,” she said. “And for right now, my housing is more important to me than my health.”
Some tenants also struggle with videoconferencing applications, attorneys say. Missing a court hearing often means an automatic victory for the landlord. In St. Louis, a legal-aid intern said he had observed several hearings where judges granted landlords evictions because they believed the tenants had failed to log into the videoconference.
In fact, they had been placed on silent mode, according to his sworn affidavit in October. Those judgments were overturned, the affidavit said.
“The courts still do not have adequate policies and procedures to accommodate these very real barriers,” said Lee Camp, a housing attorney in St. Louis.
More U.S. Homeowners Seek To Delay Mortgage Payments
A growing percentage of U.S. homeowners are looking to delay making mortgage payments, the latest sign that the economic recovery is hitting a snag.
In the first week of December, the proportion of mortgage borrowers that started seeking forbearance relief rose to its highest level since August, according to the Mortgage Bankers Association. And call volume at the companies that collect payments rose to the highest level since April, a sign of growing distress among homeowners, the trade group said Monday.
With long-term unemployment rates rising and Covid-19 cases surging, “it is not surprising to see more homeowners seeking relief,” Mike Fratantoni, chief economist at the MBA, said in a statement.
The percentage of homeowners that have started seeking forbearance is still relatively low, but the rising proportion comes even as the economy has shown signs of recovery, underscoring how uneven the turnaround is. U.S. household net worth reached a fresh record of $123.5 trillion in the third quarter, while almost 4 million workers have been unemployed for more than 27 weeks.
Homeowners are delaying payments under a U.S. forbearance program that started in March and allows mortgage borrowers to take a break for as long as a year without penalty. The total percentage of loans that are in forbearance edged lower to 5.48% in the week ended Dec. 6, from 5.54% the week before.
Yet the number of borrowers looking to enter forbearance rose to 0.12% of all the loans mortgage servicers collect payments for, the most since August, the MBA said.
As the pandemic drags on, time is running out for some borrowers. Consumers whose loans are in forbearance have to resume making payments next year, in some cases as soon as the end of March. When that happens, many homeowners will face a difficult choice: either pay their mortgage, convince their lender to somehow ease the terms of their loan, or default.
The prospect of borrowers defaulting en masse may spur lawmakers to agree to more relief for homeowners, said Don Brown, senior managing director at the mortgage analytics firm RiskSpan Inc. in Stamford, Connecticut.
“Nobody has an interest in the chaos that would come from mass foreclosures,” Brown said.
The mortgage borrowers under the most stress are those who are usually the poorest, and took advantage of government programs allowing them to put minimal money down on their homes.
Those loans are usually bundled into securities known as Ginnie Mae mortgage bonds, and according to the MBA, about 7.68% of the loans in this pool are in forbearance. That’s lower than last week, yet it’s still more than double the percentage for conventional borrowers.
And while the percentage of Ginnie Mae borrowers in forbearance may continue to decline into 2021, borrowers who remain in the program will likely be from households under greater economic stress, according to analysts at Nomura Holdings Inc.
Even with the forbearance program, delinquencies have been rising, in part because some borrowers may not know they’re eligible for relief. At the end of the third quarter, about 7.7% of loans were delinquent, according to the MBA, about twice the percentage at the end of 2019. Delinquencies are still below their financial crisis peak of around 10%.
As the program comes to an end, buyers of mortgage bonds that include loans from those homeowners could take slight hits. If the loan has to be modified, or the borrower defaults, the servicer has to buy it back from the investor at par. That can weigh on bond investors’ returns, particularly when so many mortgage bonds trade above face value.
Servicers are likely to buy back about $93 billion of mortgages this year, up from $41 billion in 2019, Kirill Krylov, a senior portfolio strategist at Robert W. Baird & Co., said last week. Fannie Mae, Freddie Mac, and Ginnie Mae ultimately reimburse these companies for any money they had to forward to bondholders. But with these kinds of figures, it’s possible the government will step in again, according to Krylov.
“There is a chance the forbearance deadline could be extended — it’s the logical thing to do,” Krylov said.
Landlord And Tenant Groups Join Forces To Stave Off Evictions
Usually adversaries, both push for more government assistance as pandemic housing fix.
A collapse in apartment rent collection during the pandemic is forging one of New York’s most unlikely political alliances.
The Real Estate Board of New York, the property industry’s main lobbying group, has joined with New York’s Legal Aid Society, a nonprofit association that advocates on behalf of tenant rights.
While these two groups are usually antagonists—and they are currently on opposite sides in a federal lawsuit over rent control—the pandemic has created common ground. Too many New York tenants can’t pay rent right now, which is making it harder for landlords to pay back their loans and causing tenant debt to pile up.
Both sides want to address the issue with more government action, mostly in the form of streamlined rental assistance.
“It’s nothing like a crisis to bring odd bedfellows together,” said Judith Goldiner, attorney-in-charge in the Legal Aid Society’s civil law reform unit. “I guess REBNY thinks they can’t evict themselves out of this crisis. And I would think that would be right.”
Asking rents for one-bedroom apartments Manhattan have fallen almost 20% over the past year, according to listings website Zumper, after a number of renters fled the city for cheaper accommodations or more space while working from home during Covid-19.
Many of those who stayed have fallen behind on their rent payments. A recent survey estimated that New York tenants may now be more than $2 billion in debt to their landlords.
The joint industry and tenant lobbying effort includes other housing groups and goes by the name of “Project Parachute.” It was first organized by Enterprise Community Partners, Inc, an affordable housing nonprofit. It has been pressing its case with elected officials, such as state Sen. Brian Kavanagh, the chair of the state Senate’s housing committee.
“Some lawmakers have been surprised to see us working together,” said Basha Gerhards, REBNY’s vice president of policy and planning. “Even though we know we won’t agree on everything, we can still work together to develop thoughtful policy reforms that help address the needs of vulnerable New Yorkers.”
The lobbying effort has been focused on changing the rules for existing rental assistance programs. New York’s Family Homelessness Eviction Prevention Supplement program, or FHEPS, requires tenants to first be brought into eviction court before they can qualify for relief. But the state’s eviction moratorium has made that impractical, limiting how much rental assistance can be distributed, the group argues.
The joint effort also advocates for raising the monthly rent ceiling to qualify for rental assistance and for expanding eligibility to more groups of people not included under current rules.
Meanwhile, New York has yet to lay out its plan for how $1.3 billion in new federal pandemic housing assistance will be spent this year. Mr. Kavanagh said he expects the state Legislature to play a significant role in deciding how the money is ultimately spent.
Neither REBNY nor the Legal Aid Society expects a permanent detente. Both submitted briefs in a continuing federal lawsuit that attempts to overturn rent control laws nationwide. REBNY favors the overturn and the Legal Aid Society opposes it.
In its latest brief from just last week, REBNY called tenant rent control protections a “grave governmental overreach in impairing constitutionally protected property rights.”
A repeal of the rent control laws would potentially subject roughly one million households in New York City to larger annual rent increases, once the economy recovers.
“I don’t expect this to be like, all of a sudden, we’re going to be besties,” said Legal Aid’s Ms. Goldiner.
Federal Courts Keep Chipping Away At The CDC Eviction Moratorium
An Ohio judge has blocked the federal eviction ban, allowing landlords to resume filings against tenants in the Cleveland area — and perhaps nationwide.
In a March 10 decision, a federal court in Cleveland blocked the national eviction moratorium, making it the second court to challenge the emergency measure implemented under President Donald Trump and extended by the Biden administration. The order clears the way for courts and landlords to resume evictions against tenants across much of Ohio.
But the landlord groups who brought the suit believe that the decision could have a broader national application, setting the stage for an earlier-than-anticipated resumption of eviction activity before the ban expires on March 31.
The judge ruled that the Centers for Disease Control and Prevention, which introduced its ban on evictions in September, lacks the authority to enact such a policy. While the court stopped short of issuing an injunction against the CDC ban, its decision goes further than the Texas court that made a similar call late in February.
The CDC and other public health experts have argued that a moratorium on evictions is necessary to prevent the spread of Covid-19. U.S. District Judge Philip Calabrese, who was nominated by Trump and sworn in on Dec. 5, said that it was the court’s duty to weigh a more limited statutory question alone.
“That narrower issue depends on interpretation of the particular statutes at issue — a more lawyerly and arcane task about which reasonable people may ultimately disagree,” Calabrese wrote in his decision.
How far the Ohio court’s decision reaches in enabling landlords to once again legally throw out their tenants for nonpayment may be an even thornier question for the courts.
According to Steve Simpson, senior attorney for the Pacific Legal Foundation and the plaintiff’s attorney in this case, at its absolute narrowest the decision would only lift the eviction ban in the Northern District of Ohio, which includes Akron, Cleveland, Toledo and Youngstown.
But he believes that the decision should also allow landlords located in other states and associated with the plaintiffs — among them Monarch Investment and Management Group, which manages more than 64,000 properties across 21 states — to consummate their eviction filings.
“This is a debate in legal circles, what’s the scope of a judge declaring a statute or rule contrary to law, whether it applies to the parties before the case, the district or the whole country,” Simpson says. “Our interpretation is that it should apply to the whole country.”
In his decision, Calabrese invalidated (or set aside) the CDC eviction moratorium under a provision of the federal Administrative Procedure Act known as section 706. The full scope of remedies under section 706 is a point of contention that has surfaced in recent years in high-profile decisions such as Trump v. Hawaii, the Muslim travel ban case.
The U.S. Department of Justice has already announced that it will appeal the Texas decision that invalidated the eviction moratorium. The DOJ statement argues that the February decision in Terkel v. CDC applies only to the plaintiffs at hand. A spokesperson for the CDC said that the agency is aware of the Ohio decision and working with the DOJ to review it and determine its next steps.
Courts across the country are still processing evictions due to loopholes in the CDC order; only in a few states, and for limited periods of time, have court filings fallen to zero. Eviction filings in Ohio have mostly fallen from historical levels, but they are on the rise.
Unless the Biden administration intervenes, courts could begin legally processing evictions in Ohio — and possibly elsewhere — immediately. Ohio renters face some of the highest risk of eviction in the U.S.
The potentially sweeping decision on evictions comes just as President Joe Biden signed the American Rescue Plan, which will deliver billions of dollars of relief to landlords in the form of emergency rental aid. But it will take some time to get those dollars flowing, which led tenant advocates to sound the alarm over evictions on Thursday.
“Now that Congress has appropriated $46 billion to address rent arrears, these lawsuits to overturn the moratorium are frivolous,” said Diane Yentel, president and CEO of the National Low Income Housing Coalition, in an email. “These landlords will be made whole, but it will take time to get the money into their hands.
Their eagerness to overturn the moratorium, despite unprecedented resources to pay rent arrears, only underscores the need to be sure the moratorium is extended at least until resources are expended. For some of these landlords, it appears it was never really about the money.”
Landlords, industry groups and civil liberties associations have worked to overturn state and federal eviction orders since Congress issued the original federal eviction moratorium as part of the CARES Act. The Pacific Legal Foundation is appealing a separate decision in a Louisiana case that affirmed the eviction moratorium.
National Eviction Moratorium Thrown Out by Federal Judge
CDC exceeded authority with ban on evictions for tenants amid Covid-19 pandemic, says judge; Justice Department appeals ruling.
A federal judge threw out a national eviction moratorium Wednesday after concluding it was legally unsupportable, upending a Covid-19 relief measure that has protected millions of tenants but created hardships for landlords.
The Centers for Disease Control and Prevention, citing public health grounds, had extended the moratorium through June for tenants who have fallen behind on their rent during the pandemic. But a series of conflicting lower-court rulings had previously called into question the measure’s legality, and Wednesday’s decision is perhaps the biggest blow to Washington’s efforts to provide eviction protections. The moratorium originated from an executive order signed by then-President Donald Trump in September.
Judge Dabney Friedrich of the U.S. District Court for the District of Columbia said that while it was the role of the political branches of government to address the pandemic, current federal law on public health didn’t give the CDC broad authority to impose the moratorium.
“Because the plain language of the Public Health Service Act unambiguously forecloses the nationwide eviction moratorium, the court must set aside the CDC order,” Judge Friedrich wrote.
The judge, a Trump appointee, set aside the moratorium on a nationwide basis, rejecting a Justice Department request that any adverse ruling apply only to the housing providers and Realtors associations who brought the case.
The ruling could make it easier for landlords to evict tenants who are in arrears. It is also a setback to Biden administration efforts to synchronize the moratorium’s planned expiration at the end of June with the distribution of nearly $50 billion in rental assistance authorized by Congress.
The ruling also may embolden more state and local court systems to stop enforcing the eviction moratorium. Last month, the Texas Court System decided not to extend its enforcement of the CDC moratorium in its eviction courts. Evictions resumed in some parts of the state as a result.
The Justice Department appealed Wednesday’s ruling hours after it was released to the U.S. Court of Appeals for the District of Columbia Circuit. The department also said it intended to seek an emergency stay of the ruling, which, if granted, would keep the moratorium in place for now.
“Scientific evidence shows that evictions exacerbate the spread of Covid-19, which has already killed more than half a million Americans, and the harm to the public that would result from unchecked evictions cannot be undone,” said Brian Boynton, the acting head of the Justice Department’s civil division.
An analysis by the Urban Institute, a Washington think tank, found that the amount of unpaid rent could exceed $52 billion. According to a Census Bureau survey conducted last month, about one in seven renters are now behind on their payments—roughly three times the typical rate.
The moratorium protects tenants who have missed monthly rent payments from being forced out of their homes if they declare financial hardship. Though originally set to expire Dec. 31, Congress extended the moratorium until late January, and the CDC twice extended the order itself, through June.
Landlords say they have been unfairly squeezed financially by the moratorium, forced to provide free services to nonpaying tenants.
Stacey Johnson-Cosby, a landlord in Kansas City, Mo., who along with her husband, manages 21 rental units, welcomed Wednesday’s ruling. While the moratorium has made it harder to get tenants to pay back rent, she said, it is now no longer needed because of the billions of dollars in available rental assistance.
“That is the right move at this time,” she said, of the ruling.
Some bankruptcy experts warned an abrupt end to the eviction moratorium could lead to a jump in bankruptcy filings, which have been kept in check by various federal policies during the pandemic, such as deferral programs on student loans and mortgages.
“If all the sudden, tenants have to pay all their back rent—six, eight, or 10 months at once—you could see a dramatic increase in consumer bankruptcy filings nationwide,” said Jonathan Carson, the CEO of Stretto, a technology provider to the bankruptcy system.
Judge Friedrich said the CDC’s powers under public-health law to prevent the spread of disease aren’t limitless. Instead, the CDC’s efforts must focus on specific sources of infection when it determines that measures taken by state and local health authorities are insufficient, she said. The moratorium exceeded those boundaries, the judge said.
A handful of other courts have reached similar conclusions, though other judges have disagreed, finding that Congress gave the CDC broad flexibility to combat disease as it saw fit.
Ethan Blevins, an attorney for plaintiffs in related cases, said that courts were increasingly less willing to defer to the government because they are seeing the harm to landlords, particularly smaller property owners, who face “foreclosure or other severe costs because they have been unable to survive as a business during the pandemic.”
He said the effects could be most pronounced in states such as Texas and Florida, which don’t have their own statewide eviction moratoriums.
Diane Yentel, president and chief executive officer of the National Low Income Housing Coalition, said the Biden administration should continue to defend and enforce the eviction ban, “at least until emergency rental assistance provided by Congress reaches the renters who need it to remain stably housed.”
Landlord lobbying and trade groups welcomed Wednesday’s ruling. But Paula Cino, a vice president at the National Multifamily Housing Council, said until the appeal was resolved the group wouldn’t advise its members to do anything that would violate the CDC order. “As of today this doesn’t change anything operationally for our members or our industry,” she said.
D.C. Mayor Has the Money To Pay Off Pandemic Rent Debt
The district has $300 million in relief funding to cover rent and utilities for those who qualify. It’s also still pushing for statehood.
A federal moratorium on rent in the U.S. is set to expire July 31, and Washington, D.C. Mayor Muriel Bowser says she’s confident the city can cover rent and utilities for those who fell behind in the pandemic.
“We have enough relief money to take care of all of the rental housing debt,” Bowser, 48, said in an interview on Tuesday. “Connecting people who need it, with the housing providers who need it, with all of the rules about how you can use this federal money has been a little bit more complicated.”
Bowser said a program called Stay D.C. will provide one-stop rent and utility assistance for those who need it, wherein money can be used to pay unpaid rent going back to April 1, 2020 or to pay forward rent up to three months at a time.
“People can get their jobs back,” she said, calling the number of job opportunities “phenomenal.” “What we continue to hear from people who may not be able to go back to the same job, where they’re transitioning jobs, we want to provide that type of training or assistance as well. But we have to get people focused on going back, because these programs will end.” D.C.’s unemployment rate was 7.2% in May, compared with 5.8% nationally.
For the city to recover, she said workers need to get back to their offices and tourists need to return to the city.
While overall crime in D.C. is down, homicides are up 17% through June 28, from a year ago, according to the Metropolitan Police Department. In 2020, homicides — most of which are a result of shootings in the city — hit a 16-year high.
The statistics mirror a rise in crime across big U.S. cities that has posed political challenges for President Joe Biden, who said last week that state and local governments can now tap into relief funds to hire police officers and pay overtime.
‘Unprecedented Spike’ In U.S. Evictions Looming As Ban Expires
A federal ban on evictions is set to expire at the end of July, and this time it’s unlikely to be extended, putting millions of renters at risk.
The moratorium has been in place through much of the pandemic, but it’s part of a wave of emergency programs ending even as the Delta variant fuels rising Covid-19 cases in the U.S.
While some states, including California and New York, have their own eviction bans, the expiration of the Centers for Disease Control and Prevention’s moratorium has housing advocates worried about a surge in landlords forcing out tenants who have fallen behind on rent.
Congress has allocated nearly $47 billion in assistance but so far states and local jurisdictions have been slow to distribute the funds.
To understand what may happen next, Bloomberg talked to housing expert Ingrid Gould Ellen, a New York University professor who has studied federally funded emergency rental assistance programs during the pandemic.
We’ve been talking about an eviction crisis since the start of the pandemic, but it hasn’t happened yet. Do you think we’re poised to see one soon?
Why or Why Not?
It hasn’t happened yet because of moratoriums, federal assistance and uncertainty among landlords about finding new tenants. But there are still a lot of renters behind on rent, and some of them are far behind on rent and at risk of losing their homes, especially if they’ve reached the end of their lease.
The Census Pulse Survey suggests that 16% of renters owe back rent. This is down from a peak of over 20% in January, but a lot of renters are still facing hardships, particularly renters of color and renters with children. Nearly one in four Black renters report being behind on rent.
A key factor will be whether the hundreds of state and local emergency rental assistance programs around the country can get these funds out the door quickly enough. The hardest-to-reach renters are also the most vulnerable to eviction, and that group is large enough to cause an unprecedented spike in eviction filings, warrants and, ultimately, homelessness if we don’t remain focused on getting them and their landlords the assistance Congress has made available.
When the CDC eviction moratorium expires, where do you expect evictions to climb the most?
I would expect evictions to rise the most in places where housing costs are high or climbing, demand is strong and tenant protections are low. That probably means the Sunbelt and the southeastern U.S., though there are likely to be widespread increases.
The economy is bouncing back. Who needs rental assistance in the U.S. now?
Supreme Court Scraps Biden’s Eviction Protection For Tenants
A divided U.S. Supreme Court lifted the Biden administration’s moratorium on evictions, ending protections for millions of people who have fallen behind on their rent during the Covid-19 pandemic.
Saying landlords were suffering “irreparable harm,” the conservative-controlled court ruled late Thursday that the U.S. Centers for Disease Control and Prevention lacked authority to impose the moratorium under the decades-old federal law the agency was invoking. The decision comes amid a spike of Covid cases around the country.
“It would be one thing if Congress had specifically authorized the action that the CDC has taken. But that has not happened,” the court said in an unsigned opinion. “It strains credulity to believe that this statute grants the CDC the sweeping authority that it asserts.”
White House Press Secretary Jen Psaki said the administration was disappointed with the decision, crediting the CDC’s eviction moratoriums for saving lives.
“As a result of this ruling, families will face the painful impact of evictions, and communities across the country will face greater risk of exposure to Covid-19,” Psaki said in a statement on Thursday night.
Liberal justices Stephen Breyer, Elena Kagan and Sonia Sotomayor dissented, faulting the court for deciding the issue without full briefing and argument.
“The public interest strongly favors respecting the CDC’s judgment at this moment, when over 90% of counties are experiencing high transmission rates,” Breyer wrote for the group. “That figure is the highest it has been since at least last winter.”
The decision is the conservative-controlled court’s second blow to Biden this week. On Tuesday, the justices left in force a ruling that requires the administration to reinstate former President Donald Trump’s “remain in Mexico” policy, which requires asylum seekers to wait in that country while their cases are being processed.
The court had left intact a previous CDC moratorium in June, but Justice Brett Kavanaugh said at the time that congressional authorization would be required for any further extension.
Congress didn’t act and progressives instead pressured President Joe Biden to issue a new, slightly narrower moratorium. The ban applied in counties with “substantial or high rates of community transmission” of the coronavirus — currently more than 95% of the country.
Justice Department lawyers argued that the delta variant of the virus had heightened the importance of the eviction ban to ensure that a wave of people aren’t forced into more crowded accommodations.
In announcing the revised moratorium on Aug. 3, Biden acknowledged the legal odds were long. But he said the ban was worth pursuing in part because the litigation would give local governments additional time to distribute more than $45 billion in rental assistance Congress has granted.
The challengers, a group of landlords and real-estate trade associations from Alabama and Georgia, said Biden’s remarks showed the administration was flouting the rule of law.
The Treasury Department said Wednesday that only $1.7 billion in rental assistance was released last month, bringing the total so far to $5.1 billion.
Representative Cori Bush, a first-term Missouri Democrat who camped out on the Capitol steps to protest the July 31 expiration of the previous moratorium, called on Congress to act.
“We already know who is going to bear the brunt of this disastrous decision — Black and brown communities, and especially Black women,” Bush said in a statement.
Maxine Waters, who chairs the House Financial Services Committee, said she would “immediately set to work on a legislative solution to address issues with the slow implementation of the emergency rental assistance program.”
“My new proposal would ensure that both renters and landlords can independently apply for emergency rental assistance so that landlords get paid their back rent, and that the program works with less bureaucracy and red tape,” Waters said in a statement issued after the ruling.
The administration has been relying on a legal provision that authorizes the secretary of health and human services to “make and enforce such regulations as in his judgment are necessary to prevent the introduction, transmission, or spread of communicable diseases.” The CDC is housed within the Health and Human Services Department.
The case is Alabama Association of Realtors v. Department of Health and Human Services, 21A23.
Where Will The Eviction Wave Hit? Follow The Big Landlords
With evictions expected to resume in the wake of a U.S. Supreme Court order, new data points to the kinds of tenants that may face the greatest risk of housing loss.
Evictions that have been delayed in many parts of the U.S. are likely to proceed, now that the U.S. Supreme Court struck down the federal eviction moratorium on Aug. 26.
The court told the Biden administration, for the second time this summer, that only Congress can authorize a federal ban on evictions. Yet efforts by members of Congress to prevent evictions have also come to naught. Rental assistance has been slow to arrive: Despite a pressure campaign from the White House to get $46.5 billion in emergency rental assistance to tenants, state and local leaders had spent only about $5 billion by the end of July.
Now some 2 million renter households owe more than $15 billion in rent, according to the Federal Reserve Bank of Philadelphia, with other estimates putting the need even higher.
Perhaps the biggest winner amid all these setbacks for tenants? The biggest landlords.
Over the course of the pandemic, owners of large apartment complexes have filed the lion’s share of evictions against tenants. Across a dozen cities and counties where data are accessible, evictions at just a small number of apartment buildings contributed between one-fifth and one-half of all pandemic eviction filings, according to new data from Princeton University’s Eviction Lab.
The analysis points to the potential shape and location for a wave of evictions unleashed by the Supreme Court’s decision.
In Phoenix (Maricopa County), filings from just 100 addresses accounted for 21% of all eviction filings since March 15, 2020, according to new data from Princeton University’s Eviction Lab. For Greenville, South Carolina, evictions at the top 100 buildings with the most filings made up 47% of all pandemic evictions. Some of these evictions that have been pending for months could now proceed any day.
These figures can’t account for overall eviction activity by corporate landlords, since the identity of building owners are often shielded by LLCs. A single corporation might own several buildings under different shell companies.
These large landlords routinely use eviction threats as a way to collect rents rather than remove tenants. So as a reflection of overall eviction activity by large landlords, figures on the properties with the most eviction filings are conservative, according to Peter Hepburn, assistant professor of sociology at Rutgers University-Newark and research fellow at Eviction Lab.
“If you looked at the top 100 companies that are filing eviction cases in Memphis, that’s going to account for a much larger share of all filings in the city than just the top 100 buildings,” Hepburn says.
Pockets of Evictions
Data on evictions reveal patterns of compounding despair in places that have struggled against vicious cycles. The new Eviction Lab data points to the role of corporations and large property owners in perpetuating these cycles.
In Houston, for example, buildings within the Villa Serena Communities portfolio dominate the list of addresses with the most eviction filings. These buildings are concentrated in Greenspoint, a suburb nicknamed “Gunspoint” for its historically high crime rates and one that developers are trying to rebrand as North Houston.
Biscayne at Cityview, a modest Villa Serena complex with 560 units in the Greenspoint area, ranks third for eviction filings for any address in Harris and Galveston Counties, with 136 eviction filings since the start of the pandemic.
Other Villa Serena properties follow close behind, including (and not limited to) Breckenridge at Cityview (#7), Serena Woods (#11), Crescent at Cityview (#17), Rockridge Springs (#31), Rockridge Bend (#48), Rockridge Station (#67) and Amherst at Cityview (#84).
Records from the Small Business Administration show that the company that owns these buildings — VSC Management LLC — received $2.7 million through the Paycheck Protection Program.
Steve Moore, cofounder and managing partner of VSC Management LLC, manages the more than 6,000 units in Villa Serena apartments around Greenspoint. A 2017 report by the local CBS affiliate praised Moore for his efforts to collaborate with law enforcement to reduce crime at his properties. Moore himself lives at Biscayne at Cityview, where, according to Eviction Lab data, Moore’s company filed to evict 18 of his neighbors over the last 8 weeks. (Moore did not return requests for comment.)
Eviction data highlight the concentration of court filings for homes in poorer neighborhoods. In St. Louis, eviction filings at just 20 addresses — many of them apartment buildings in the working-class suburb of Florissant — accounted for 14% of all pandemic evictions. Similar patterns follow for Cincinnati, Indianapolis, Phoenix and other metros.
The Brooklyn at 9669, the number-one apartment complex for pandemic eviction filings in Dallas County, has filed evictions against about a fifth of the residents of the complex, some 225 people, since March 2020. Even before the pandemic, a lawsuit against the property owners by the city of Dallas alleged that it was creating a nuisance by tolerating criminal activity.
Another study at Princeton finds that large landlords in Boston filed evictions at two to three times the rate of small landlords, and often for less money owed, too. Often, landlords are filing these evictions in automated processes, or even as a strategy for accessing federal rent relief that has been hard to come by.
“We know that under normal circumstances, larger landlords tend to evict more aggressively than smaller landlords,” Hepburn says. “Often larger landlords are the ones who are more likely to have very set policies and rigid, algorithmic tracking of rent collection. The determination about whether to file that eviction case isn’t made so much by the individual who is managing the property as it is by corporate headquarters, who says as soon as someone falls behind on rent, the appropriate next step is to file for eviction.”
A Soft Landing for Big Landlords?
Landlords of all size levels struggled during the pandemic, at least compared to their pre-pandemic norms. Property owners who saw rent payments slip missed utility or tax payments, sought mortgage forbearance and even sold off properties. (Nearly one-third said they delayed repairs and maintenance, a six-fold increase from 2019.)
But the pain is relative: While mid-sized landlords (owners of 6–19 units) and larger landlords (20+ units) were much more likely to report non-payment during the pandemic than small landlords (1–5 units), most larger landlords were not deep in the red.
According to a survey of property owners in 10 cities by the Joint Center for Housing Studies at Harvard University, 10% of small landlords and 8% of mid-sized landlords said that they were still owed half or more of their rent by the end of 2020, compared with just 3% of large landlords.
And the owners of market-rate properties — those that don’t have subsidized or affordable housing — have barely suffered at all: The National Multifamily Housing Council has reported that rent collection levels at professionally managed buildings have hovered around 95% from 2019 through August 2021, never falling below 93% and rising as high as 97%.
The Harvard survey finds that more landlords granted rent extensions or forgave back rent than perhaps ever before, but if that has been a factor at all for the market-rate sector, it’s been a small one.
Industry leaders looking at these figures insist that there is no wave of evictions on the horizon, despite the dire warnings of a tsunami once the final federal levee breaks. Indeed, the survey shows that the share of landlords across 10 cities who filed an eviction against at least one tenant was the same for 2020 as it was in 2019 (15%). Of course, there’s been a moratorium in place for most of this time, however inconsistently it’s been applied.
“Of the eviction filings that are processed every month, the vast majority of these are cured before anything else has to take place,” says Doug Bibby, president of the National Multifamily Housing Council. Eviction notices can serve as a warning that results in negotiation, or even access to government assistance. However, families also vacate their apartments when they receive notices without appealing for their rights in court.
Bob Pinnegar, president and CEO for the National Apartment Association, also says that the prospect of a tidal wave of evictions is overblown: “Predictions of millions of people being put out on the streets this month is a gross exaggeration.”
If the evictions to come in the wake of the Supreme Court’s decision follow the same course as the evictions that persisted while the moratorium was still in place, then they will disproportionately fall on Black and immigrant families living in class-B or class-C apartment complexes owned by large landlords. The Harvard survey sees this course taking shape already: Renters in low-income neighborhoods or majority-minority neighborhoods had more difficulty paying rent, yet were significantly less likely to see any rent forgiveness.
Such a wave of evictions could exacerbate the ongoing public health crisis. Areas with historically high eviction rates have low vaccination rates. Yet a wave of evictions may also look a lot like the status quo. That points to a real policy failure: With billions of dollars in rent relief, and few large landlords facing real jeopardy, they still could not be dissuaded from filing evictions as a matter of course.
L.A. Sheriff Predicts New Homeless Surge When Eviction Curb Ends
Los Angeles County, already at the epicenter of America’s homeless crisis, could see its unhoused population nearly double after pandemic-related eviction moratoriums end, according to local Sheriff Alex Villanueva.
The number of people experiencing homelessness in the county could rise to more than 150,000 in the next few years from about 80,000 now, Villanueva told Bloomberg News in an interview. The most recent official homeless census in January 2020, before the economically-devastating pandemic, counted about 66,000 in the greater L.A. area.
Some of that growth could come from the 360,000 county residents who are at risk of eviction, he said. But the sheriff added that a main driver will be people relocating from other states, who typically start living on the streets of touristy areas like Hollywood and Venice Beach.
“We are destined to be overrun by the homeless in the next three to four years based on when these moratoriums start expiring,” Villanueva said. “It’s headed to a bad place.”
Officials on a local and national level are wrestling with when to end the moratoriums, which were put in place at the start of the Covid-19 outbreak to prevent people who’d lost their jobs from also losing their homes. In Los Angeles County, the temporary moratorium that went in place in March of last year is due to expire at the end of September.
Villanueva made headlines earlier this year for operating outside his traditional jurisdiction to clear out encampments in the L.A. community of Venice Beach — an approach that critics say simply moves the problem from one location to another without recognizing the root causes of the state’s housing affordability crisis.
The sheriff, who faces a tough race for re-election next year, said he is continuing his clean up efforts in other parts of Los Angeles. Villanueva blamed the severity of the homelessness problem on aid groups that directly bring food and resources to those living on the streets and elected officials who have failed to fulfill promises to build more housing options.
“There is no such thing as permanent housing, it’s a fallacy,” he said. “All you’re telling everyone else is ‘Hey come on over, it’s great over here.”’
Another “existential threat” facing the county is a major uptick in violent crime, said Villanueva. The sheriff’s department reported that the number of murders surged by 60% to 187 between January and Aug. 24, compared with the year-earlier period. That puts the county on track to overtake last year’s total of 201 homicides, which was the highest since 2016. Murders will probably end the year up by 60%, Villanueva said.
He cited worsening joblessness and economic prospects stemming from the pandemic and a cut to his office’s budget as some of the key reasons for rising crime rates. The sheriff also referenced local and state measures that have reduced punishments for some crimes or released criminals early from prisons.
Violent crime has increased in many big cities across the country, including New York where former police captain Eric Adams has put public safety as a top priority in his pitch as the Democratic nominee for the New York mayoral vote in November.
Likewise in Los Angeles, fighting crime, along with homelessness, will be key issues for voters when they go to the polls for scheduled elections next year for a mayor. The current mayor Eric Garcetti is awaiting a Senate confirmation hearing as the nominee for U.S. Ambassador to India.
“I think Eric Adams winning the Democratic primary is a shot across the bow,” said the sheriff, who described himself as a lifelong Democrat. “This woke crowd that’s taken over the left wing of the Democratic party, they’re so out of touch that it’s frightening.”
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