Pay to stay may be here to stay. rhino!UP for July 4th
Early in the pandemic, a group of lawyers at Advocates for Legal Equality (ABLE) devised a way to solve a glitch in Ohio Law that made tenants liable for eviction if the tenant is one day late with their rent. ABLE's "Pay to Stay" concept is a local ordinance that authorizes courts to require owners to accept late rent payments up to the point of the eviction hearing. Owners would be permitted to collect reasonable late fees along with rent due. While the idea grew out of discussions sponsored by Dayton Mayor Nan Whaley (now an announced candidate for Ohio Governor in 2022), it was Yellow Springs Village, just outside of Dayton, that was the first local municipality to adopt Pay to Stay in May 2020.
Remember the moment. The pandemic was putting thousands of Ohio tenants out of work and unable to pay rent. The Governor had declared a Covid 19 emergency and small scale efforts to provide rental assistance were in their infancy. In short order, Toledo followed the Yellow Springs' example. Later Cincinnati enacted a Pay to Stay ordinance. Local and Federal Moratoriums on eviction provided time for tenant advocates to make the pitch to their local officials that Pay to Stay could make a difference between a stable home or homelessness. RHINO raised the issue in an Opinion article in the Cleveland Plain Dealer early in the pandemic.
The Northeast Ohio Coalition for the Homeless (NEOCH) took up the cause of Pay to Stay in the communities surrounding Cleveland. As a result of NEOCH's work, the cities of Lakewood and Euclid have adopted Pay to Stay. Local advocates in Cincinnati and Akron also won adoption in Cincinnati and Akron. And...after a long delay and local wrangling, Pay to Stay was adopted in ABLE's home base, the City of Dayton.
Of course these local ordinances were challenged by landlords, but two recent decisions in Toledo and Akron have confirmed the validity of the local Pay to Stay ordinances.
A different sort of challenge has been the "sunset clauses" which were adopted in some of the local Pay to Stay Laws. When Governor Dewine declared the end of the COVID 19 emergency on June 18, 2021, some of the original ordinances were set to expire. Again, the Village of Yellow Springs led the way by making their Pay to Stay ordinance permanent. It just makes good sense to help keep families in their homes when all they need is a "grace period" to get the rent together.
The adoption of local Pay to Stay ordinances is an example of an "advocacy" reform that has proven its value when incorporated into court operations. Even without a moratorium, tenants can seek rental assistance that can be used to prevent involuntary displacement. In the past, rental assistance programs from local sources could only be used to pay for relocation.
However, as the pandemic emergency wanes in the minds of elected leaders, more grassroots activism may be required to win or maintain local Pay to Stay protections. This week, NEOCH kicked off a new effort to jumpstart Cleveland City Council's consideration of a local Pay to Stay ordinance. As everyone knows, the need to prevent involuntary displacement is a permanent feature in rental housing. Too many rental households, pandemic or not, are just a paycheck, car repair, or medical payment away from being homeless.
Nan Whaley's 2022 campaign for Governor could provide an opportunity for grassroots activists to get more involved at a statewide level. Surely Mayor Whaley will be talking about her role and support for a statewide Pay to Stay ordinance as she travels around Ohio. Legal Service and other policy advocates, which are barred from electoral activities by their tax exempt status, should start planning now to create an electoral base to seize this opportunity to reduce housing instability.
Housing Bubble 2022? rhino!UP for July 11, 2021
The news is full of stories of aspiring homeowners being blocked from the home of their dreams by skyrocketing prices. Could this be another case of investor speculation that could trigger another Great Recession? So far economists and housing providers say "no." They argue that housing inflation is a temporary imbalance caused by a low supply of houses and a pent up demand fueled by low interest rates. Just wait and the market will fix the problem.
The latest annual report from the Joint Center on Housing Policy (JCHS) insists that rapidly rising sale prices of housing do not signal a "bubble" (unsustainable inflation based on investor speculation), but merely a supply and demand imbalance. That sentiment is repeated in Politico this weekend: "For now, financial markets have shrugged off the recent spurt in inflation, given signs that it is tied to temporary factors that will subside as the country emerges from the pandemic."
However, looking at the real economy of people's lives shows the impact of a K-shaped recovery on housing options. In the current recovery, people who worked from home (white collar, well-to-do households) did very well. Steady income, stimulus payments, a reduction in other discretionary spending, and a booming stock market have made these households unexpectedly wealthy. Meanwhile, wage earners were laid off or faced increased costs for transportation, personal protection, and household necessities. Many were making do with slow-to-arrive rental assistance and on again-off again unemployment supplements.
Granted that supply and demand (microeconomics) could be self-correcting over time. The question is whether there's enough time to keep residential inflation in check. After all rents are not subject to short term fluxations like milk, lumber, or gasoline. Once they go up, they stay up. The facts on the ground offer clear examples of a spill over from home purchase price inflation and rising rents.
Just a month ago, JCHS noted that aspiring first time homebuyers are turning to single family rentals instead home ownership.
WVXU Cincinnati reports Downtown Residents Find Themselves Caught In Affordable Housing Gap — Are Solutions Coming? "Since it was founded in 2018, Vision and Beyond has invested more than $84 million in real estate and acquired more than 1,200 rental units in neighborhoods like Avondale, Mount Auburn, and Walnut Hills. It also has investments in cities like Columbus and Lexington and operates offices in Cincinnati and Tel Aviv."
Cleveland's Channel 5 reports on Akron's housing market: Apartment and housing rental shortage continues as eviction moratorium looms. "Several landlords and property managers told News 5 they're seeing a shortage in available units, similar to what's happening with housing inventory."
One month ago, Slate observed that Investment Firms Aren’t Buying All the Houses. But They Are Buying the Most Important Ones.. "It’s not exactly accurate that investors are 'buying every single-family house they can find,' as some have suggested. [ ] They’re really buying up the stock of relatively inexpensive single-family homes built since the 1970s in growing metro areas."
Back in February, rhino!UP explained the importance of President Biden's pledge of equity investing in America's future. If the President's efforts to shift some income to the lowest economic sector arrive soon, then the economic recovery could lose its K shape and look more like broadly based recovery. Merely waiting for the supply and demand to work itself out could result in a non recovery like the one middle and low income households experienced after the Great Recession. A 2011 study from PolicyLink forecast this problem: "The most vulnerable—low-income people and people of color—were hit first and worst. They are still waiting for a recovery that continues to sputter along and is at risk of 'double-dipping' into another recession."
Politico Money reports NEW APPETITE FOR MORTGAGE BONDS THAT SIDESTEP FANNIE, FREDDIE — WSJ’s Ben Eisen: “Wall Street is diving back into the business of turning home loans into bonds, injecting new competition into a market long dominated by government-backed mortgage giants Fannie Mae and Freddie Mac. 'The so-called private-label mortgage market — in which financial firms serve the middleman role of creating giant pools of loans and selling them to investors — had more than $42 billion of issuance in the second quarter. That is the most since the pandemic started and almost the most for any quarter since the last financial crisis, according to Inside Mortgage Finance, an industry research firm.' ”
Aug. 24, 2021. Cleveland.com. House hunters are increasingly going up against hedge funds in a hot housing market. "Homebuyers are increasingly going up against hedge funds and other big institutional buyers in a hot housing market — and they will need to bring their best offers to the table. Cheri Benjamin, Realtor and CEO of Village Premier Collection, which services Atlanta, Las Vegas and Tampa Bay, said buyers might want to try and put down more than 20% and get their bank to wave an appraisal, as well as see what other contingencies they can do without. That’s because institutional buyers are now paying in cash and often at the listing price or above."
July 10, 2021. WaPo. Rent prices are soaring as Americans flock back to cities. "If a renter is not willing to pay the higher rate, landlords are confident they can find someone else — or sell the property. The post-covid luxury spending boom has begun. It’s already reshaping the economy. Nick Kasoff, a landlord of 15 properties in Ferguson, Mo., gets at least a call a day from investors asking if he is willing to sell one of his rental homes. So far, he has said no."
JULY 23, 2021. Slate. Why Inflation Could Linger. "Rents, for instance, have been rising much more slowly than normal since the pandemic began. But, as the New York Times explained this week, they could soon start escalating again. Since housing makes up a big chunk of the consumer price index, that could have a major impact on inflation." More risky is the reality that inability to afford rent will trigger an fall in the overvalued property market.
Aug 5, 2021. Marketplace. Report shows decrease in underwater mortgages. "ATTOM, the real estate data company, said in the second quarter of this year, only about 4% of mortgaged homes were seriously underwater, with the homeowner owing at least 25% more than the house’s value. ATTOM’s Jennifer Von Pohlmann chalks this up to rising home prices. 'It’s really having – helping homeowners get out of any hole they may be in,' she said. Pohlmann doesn’t expect a wave of foreclosures like we saw in 2010, at the height of the housing crisis when, according to Redfin chief economist Daryl Fairweather, nearly a quarter of homeowners were underwater. She said there could be forced sales, instead of foreclosures." rhino responds: If or when house prices drop from their current nosebleed levels? Those houses which were floating on the bubble go PFFFFT and investors scoop up the failed mortgages to convert them to single family rentals...just like happened in 2010.