Looking for housing, post Corona. March 3, 2021
Even as home sales are booming, the rental housing market seems to be getting tighter. In normal markets, when more families move from rental to homeownership, more rental units become available. But the year long CoronaCrisis has changed the rental landscape for landlords and tenants. Here's some explanations, based on news articles and interviews, about what homeseekers may be facing when looking for a new rental home this spring.
One impact of the Corona Recession is that many tenants are stuck at home. On and off employment, underemployment, child care for out of school children and the general fear about socializing with strangers make a home search problematic. Tenants who are dependent on rental assistance are unable to get caught up with their present landlord. Some are sitting on money that could go towards rent because they believe that they are protected by the eviction moratorium. Fewer tenants moving out means fewer vacancies for those prospective tenants looking for a place to live. A RHINO reports:
"There appears to be even greater competition among renters in the lower cost housing rental markets. Tenants with any prior dings to their rental history (credit issues, criminal records, or prior evictions) seem to face even greater challenges securing housing and are being forced to accept substandard housing in order to have any housing at all. The stress of the pandemic and the toll it’s taken in folks’ lives further heightens the insecurity folks feel at even the thought of having to move."
Landlord uncertainty is another factor. Many landlords are taking a wait and see approach to marketing their vacant units. Some express the fear that a new tenant will pay once and then stop paying during the eviction moratorium. Others are demanding much more evidence that a prospective renter is credit worthy. There seems to be an increasing use of credit scores to screen tenants.
It's hard to tell right now, but landlord uncertainty may be exacerbated by increased regulation of rental properties by local jurisdictions in Ohio. Last week's rhino!UP focused on increased rental regulation. The roll out of lead safe housing rules in Cleveland, source of Income (SOI) and registration increases in Reynoldsburg, expanded rental registration in Massillon, and proposed SOI protections in Columbus maybe adding to anxiety about the future of rental housing in a more regulated market. Anecdotally, RHINO hears that Cleveland landlords are refusing to accept rental assistance because the properties must be registered with the City in order to qualify for payments under the CARES act.
The CoronaCrisis has not helped solve the short supply of affordable rental housing units in Ohio. With the coming of Spring, some new developments seem to be breaking ground, but those units won't be ready for occupancy for 9 months to a year. "Speculation has been that the natural turnover that occurs throughout the year has been impacted by the moratorium. Again, this is speculation but has been a common theme from Ohio/national peer to peer calls."
What's the impact of eviction moratoriums on homeseekers?
Expect more screening, especially more use of credit scores to screen out prospective tenants. Checking your credit records is always a good practice before seeking housing.
One way to combat a bad score could be to ask your present landlord for a reference that emphasized your care of the unit and efforts to make payments in spite of the CoronaCrisis.
Watch for application fees that can drive up the cost of your homesearch.
Watch for scams--too good to be true is probably not true. Before you start your home search do an internet search for "rental scams ohio" You'll find plenty of examples to watch out for.
Thanks to JoshJ, KrisK, and MollyM for contributing to this article.
CDC moratorium under attack, about to expire, maybe replaced? rhino!UP for March 14, 2021
While local and national media were focused on additional rental assistance and two court decisions against the CDC moratorium, housing advocates are waking up to the fact that the American Rescue Act failed to extend the CDC moratorium. The eviction moratorium expires on March 31, 2021. Legal service lawyers are scurrying around on two fronts. They are reparing to defend an onslaught of new eviction cases on April Fools Day and pushing officials in DC to extend the existing moratorium.
Preparing courts for the onslaught of new cases means being ready to defend a lot of tenants all at once and encouraging eviction judges to utilize equitable solutions through mediation and 'work out' agreements instead of massive involuntary displacement. In Ohio, tenants and courts don't have much leverage because Ohio landlords are not required by law to accept late payments. Local efforts to enact "pay to stay" (P2S) ordinances have succeeded in Yellow Springs and Toledo, Ohio. Meanwhile P2S local ordinances are under consideration in Dayton, South Euclid, Euclid, and Lakewood, though none has been enacted yet. Check out Cleveland State University brown bag luncheon for more on P2S movement in Northeast Ohio.
Legal service attorneys reported on Thursday that eviction cases were being filed, citing the Texas and Ohio CDC decisions, even though the US Department of Justice (DOJ) asserts that these cases only apply to the plaintiffs in the case. It is not clear now whether DOJ will attempt to stop courts from enforcing these decisions beyond that limited scope.
Welcome to Monopoly-world! Will Congress extend the moratorium? Will Biden issue an executive order? Will the Supreme Court weigh in? When you pass GO. landlord collects all the rent due and tenant is homesearching.
HUD Secretary Marcia Fudge confirmed. Now what?
It is generally acknowledged that Secretary Fudge inherits the worst housing crisis in decades. The Corona Recession has left thousands of households underwater on their mortgages and overdue on their rents. Emergency rental assistance, infused with confusion as discussed above, is likely to be a reality through the rest of 2021. (see above).
The Secretary has already identified plans for her tenure at HUD, beginning with expanded civil rights protections, assistance to first time homebuyers, and expanded housing choice vouchers. Bloomberg News reporter Kriston Capps singles out the Biden administration's commitment to fully fund the Housing Choice Voucher program constitutes a dramatic break with the past. "The president has called for expanding the Housing Choice Vouchers program...to be a federal entitlement, meaning that anyone who qualifies for federal rental assistance under the program will receive it." Say goodbye to lotteries to get on to a years long waiting list! More importantly, universal vouchers means no more need to resort to emergency rental assistance the next time the economy collapses. The program to help will be already in place.
What's missing? The Secretary doesn't talk a lot about housing production, but that could be in the upcoming infrastructure bill. And she doesn't offer much news for existing public and private assisted housing. After all, public housing reform was addressed under President Obama by the Rental Assistance Demonstration program (RAD) program and privately owned rental properties were stabilized in the Mark-to-Market program under Presidents Clinton and G.W. Bush.
Extend the CDC Moratorium? rhino!UP for March 21, 2021.
As the informal, but unmistakable, movement towards normalcy emerges, there's a lot of confusion about the next steps for renters. Facing challenges from adverse court decisions, mounting levels of back rent owed, and cumbersome implementation, policy makers seem to be at a loss to know what to do next. Remember a year ago when policy makers were proposing a temporary moratorium that was just long enough to deliver some emergency rental assistance? Now it seems like periodic doses of rental assistance are a fuzzy sort of entitlement. Kinda like getting a vaccine against the side effects of COVID.
Tenant advocates are demanding an extension of the CDC moratorium, with all its gaps and traps because they don't seem to have another answer. The eviction avalanche is still looming on the advocate's horizon. National Low Income Housing Coalition reports "Nearly 2,300 Organizations Urge President Biden to Extend, Improve, and Enforce CDC Eviction Moratorium." To their credit, there are signs of some kind of executive action. The American Prospect reports "First 100: CDC Moves to Extend Eviction Moratorium." In a press conference from the White House, HUD Secretary Fudge assured the media that CDC was addressing the problem. Last Thursday, Beth Cooper of the Senate Banking Committee staff told the CSU Brown Bag Lunch that she's confident something will be done to extend the moratorium.
Meanwhile landlords around the country continue to bring legal challenges to the CDC moratorium. They are encouraged by a series of decisions in District court filings. The Justice Department (DOJ) response seems muted.
"The Department of Justice respectfully disagrees with the March 10 decision of the district court in Skyworks v. CDC concluding that the moratorium exceeds CDC’s statutory authority to protect public health. In the Department’s view, that decision conflicts with the text of the statute, Congress’s ratification of the moratorium, and the rulings of other courts. In any event, the decision applies only to the particular plaintiffs in that case. It does not prohibit the application of the CDC’s eviction moratorium to other parties. For other landlords who rent to covered persons, the CDC’s eviction moratorium remains in effect."
This sounds, to an outsider, like DOJ would like to see the problem go away these cases reach the Supreme Court.
"Temporary" is the problem here. Saul Alinsky is famous for recognizing that "a tactic that drags on too long becomes a drag." The various moratoriums were tactics designed to forestall an eviction avalanche until rental assistance could be delivered. In Ohio, there was no statewide moratorium, just an advisory from the Ohio Supreme Court outlining what local courts should take into consideration. When the first CDC moratorium was created by the Trump administration, it was a short term patch that needed to be extended twice more.
Similarly with rental assistance, multiple funders with multiple points of entry were created by local and state governments. Competing programs in the same jurisdiction often have different rules and procedures. Their data systems don't talk to each other. And tenants are obliged to gather reams of info to meet the requirements of a moratorium that was designed to keep them safe at home.
As early as July of last year, the Center for Budget and Policy Priorities recognized that the need was both temporary and chronic. CBPP advised delivering rental assistance through existing programs. "Even before the pandemic, millions of individuals and families were homeless or struggling to pay the rent; the health and economic crises have deepened these problems. Recognizing this, policymakers must include comprehensive housing assistance in the next COVID-19 relief package, prioritizing aid for people with the most severe housing needs."
Where from here? Whether the CDC moratorium is extended or not, the need for short term rental assistance and long term rental support will continue far into the next few years. The issue demands that policy makers and advocates devise real solutions instead of extending stop gap "solutions."
March 5 2021. The Intercept. The program to assist with rent has run into numerous barriers in distributing aid — including landlords. "Though the federal eviction ban has helped keep many tenants in their homes over the past year, Yentel noted that eviction moratoriums on their own have 'never been the end solution.' These orders only postpone evictions, as the amount of unpaid rent accrues. A January report from Moody’s Analytics estimated that Americans owe about $57 billion in back rent.Some of the emergency rental assistance programs that struggled to distribute aid didn’t have the staff or capacity to be able to review all the applications that were coming in, while some programs were slowed down by additional layers of bureaucracy. Burdensome documentation requirements and complicated application processes — which vary place to place — are also barriers to assistance, excluding some of the households that were most in need."
Center for Public Integrity is hoping to gain a better understanding of people’s experiences with financial assistance programs for renters, eviction cases started during the eviction ban, and other issues affecting tenants. Survey here: https://forms.gle/J5kgnWHTeZVKRbbv9
Good Summary of lawsuits on CDC Moratorium. March 21, 2021. Saporta Report. CDC eviction ban struck down in Tenn. as legal challenge renewed in Atlanta
March 22, 2021. Ideastream. As Eviction Moratorium Wanes, Some Cleveland-Area Tenants Already Out. "The bills could prove unaffordable for many tenants, leading to a wave of legal eviction filings like what happened last June, after a different moratorium expired and before the CDC moratorium took effect."
March 23, 2021. One News Now. Landlords pushing back on CDC eviction order. "A legal group is coming to the defense of landlords who it says are being victimized by the CDC's eviction moratorium."
March 23, 2021. WaPo. Biden administration eyes extended ban on renter evictions as stimulus delays, landlord lawsuits loom. "The extension under discussion could run at least through July, according to two people familiar with the matter who spoke on the condition of anonymity to describe a decision that isn’t yet final. Without it, the federal eviction ban is set to lapse in seven days, opening the door for some Americans to be removed from their homes." Thanks LeslieS.
Types of landlords and a little about why it's important rhino!UP for March 28, 2021
A typology is a tool in the social sciences that attempts to identify groups within a socio/economic class. Typologies can be useful when fine tuning policies or programs. Naming generations, for example, is a way to distinguish between the differences among age cohorts: Boomers, GenX, Millennials, and GenZ. Just be careful! Attributing any "group" characteristic to an individual who may be a part of the group is stereotyping and offensive. Types are broad generalizations, but helpful in planning. [1]
"Mom and Pop" landlords. You know them. They own a rental property upstairs or down the street. They depend on rent for monthly income after covering operating costs. Because they anticipate an increase in the asset value of their property as a kind of savings account, they are conscious of the need to maintain and upgrade their property on a regular basis.
"As is" owners. "As is" owners operate in the same kinds of neighborhoods and the same kinds of rental units (single, two family, and small multifamily), but usually they don't live close to their rental properties. "As is" landlords rely on rent for personal income, but don't expect a windfall from an increase in the value of the property. Therefore, they skimp on repairs and often neglect paying taxes and other operating expenses. Low overhead means that "as is" owners can afford to charge lower rents, extend credit, make workout plans (including tenant labor in lieu of rent), and adjust rent to the income of reliable but indigent tenants. Increasingly, these "as is" owners are becoming limited liability corporations (LLCs) in order to hide their individual identities behind a corporate name. Most try to operate beneath the radar of official notice.
Investor landlords. Since the Great Recession, a new type of rental housing owner has appeared on the scene. Spawned by the low housing prices following the Great Recession, the inspiration of late night TV infomercials, and favorable tax laws, these investor landlords operate true businesses. They use LLCs to maximize their tax advantages and to attract cash investors. Return on investment (ROI) is their primary goal in becoming owners of rental property. To maximize their ROI, investor landlords are looking for undervalued properties in growing markets. Often these investors are "flippers" who rehab rental properties for resale. The chat site BiggerPockets is an online home of the investor landlords. This form of "landlording" has grown so rapidly that investor are displacing traditional home buyers in neighborhoods where there is a strong demand. Investors often buy houses for cash before they are listed for sale by conventional real estate agents. Online real estate websites like Zillow are expanding into this form of landlording.
Wall Street Landlords. Another invention of the Great Recession is the single family rental housing model created by financial managers with access to capital from around the world. Buying blocks of hundreds of single family homes at tax and foreclosure sales, these investment firms bundle their holdings into bonds which are traded on Wall Street or through private sales. The biggest Wall Street landlords (American Homes 4 Rent and Invitation Homes) focus on upscale rentals. They tend to view tenants as interchangeable parts in a giant corporation. They are quick to charge for "damages" and evict for nonpayment. Depending on the local housing market, Wall Street landlords can raise rents to generate income or sell assets where purchase prices are rising. Whether leasing or selling, Wall Street landlords are not buy and hold corporations.
Corporate owners. Corporate owners of residential property tend to be vertically integrated operations whose operations include development, financing, and managing multifamily developments. They may be privately held or publicly traded Real Estate Investment Trusts. As long term investors, corporate owners tend to be a stabilizing influence in communities where they operate.
Policy makers and advocates have been slow to adapt to this new rental ecosystem when they plan regulatory reforms to protect tenant rights and community stability. While new forms of rental property ownership were generated by the Great Recession (2008), the Corona Recession has continued to benefit these new ownership models.
More on landlord typologies at Urban Landlords and the Housing Choice Voucher Program and Characteristics of Rental Properties and Landlords in Cleveland.
Additional thoughts
[1] You wouldn't describe a natural ecosystem by saying, "oh, there's lots of animals there too." You'd try to identify and distinguish them one from another.