EDITOR NOTE: The COVID pandemic did real injury to our economy and to the individuals and households that once played a strong part in it. The need for fiscal stimulus--whether you agree with it or not--is, at the least, quite evident. All you have to do is look to your friends, family, and neighbors. 10 million Americans can’t pay their rent. That’s almost 20% of all renters in the US. And if you were to break down that tragic statistic, a large majority of them are not just one or two months late in their rent--most are four months behind. This article focuses on just one fraction of a much wider socio-economic spectrum. The reality of our “recovery” is that the markets are providing a “promise” that our economy simply can’t deliver. Without Main Street--which represents everything from your healthier mid-size businesses to your local mom-and-pop stores--there is no economy. Because without real production, there’s nothing left but financial fluff--printed money and credit. And that’s what we’re seeing today: a healthy financial economy over a sick real economy. The financial stuff isn’t tangible. It may be large and expanding, like a real bubble (the kind you blow as a kid), but you know that it's all air. That’s our economy today.
About 18% renters in America, or around 10 million people, were behind in their rent payments as of the beginning of the month.
It is far more than the approximately 7 million homeowners who lost their properties to foreclosure during the subprime mortgage crisis and the ensuing Great Recession. And that happened over a five-year period.
In one of his first executive orders, President Joe Biden extended the Centers for Disease Control and Prevention’s current eviction moratorium through the end of March, but that is unlikely to be long enough.
A new analysis from Mark Zandi, chief economist at Moody’s Analytics, and Jim Parrott, a fellow at the Urban Institute, shows the typical delinquent renter now owes $5,600, being nearly four months behind on their monthly payment. This also includes utilities and late fees. In total, an astounding $57.3 billion is owed. This includes all delinquent renters, not just those suffering financially due to the Covid pandemic.
“Compared to renters that are making their rent payments on time, currently delinquent renters are more likely to be lower income, less educated, black and with children,” noted the authors of the analysis.
The $900 billion relief package passed in December provides $25 billion for both renters and landlords. It is being disbursed by the states and can be used for past and present rent, as well as fees and utilities. Renters must show that they suffered financial hardship due to the pandemic, have incomes below 80% of their area median income and are at risk of becoming homeless.
Zandi and Parrott’s analysis, however, shows that it is not even close to enough. If dispersed expeditiously, which is a big if, the $25 billion would bring the numbers down until April. By March about 6.3 million renters would be behind on payments, with total arrears of about $33 billion. Then the numbers would begin to creep up again.
“Eviction is a serious possibility. Lawmakers deserve credit for ensuring that these households did not lose their homes. But they need to do more. Soon,” Zandi and Parrott wrote.
The Biden administration has proposed $25 billion in additional rental relief in its $1.9 trillion stimulus package. It includes an extension of the eviction moratorium through the end of September 2021. That plan is already drawing criticism from Republicans and even some Democrats as being far too expensive. It remains to be seen if any cuts to that plan would come from the rental relief.
In addition, the CDC’s eviction moratorium is coming under fire from both tenant advocates as well as landlords.
“Extending the eviction moratorium is, on its own, insufficient,” wrote Diane Yentel, president and CEO of the National Low Income Housing Coalition. “The existing moratorium is flawed and some landlords exploit loopholes to evict tenants despite the protections. No federal agency is enforcing the order’s penalties for unlawful evictions.”
The NLIHC, along with about 2,000 national, state and local organizations, signed a letter sent to Biden, calling for additional relief and enforcement.
Meanwhile landlords, many of whom are now struggling to pay the mortgages on their properties, are concerned that an extension of the eviction moratorium through September would do more harm than good.
“Allocated rental assistance funds do not fully address the $70 billion in outstanding debt nor accruing debt moving forward. The industry simply cannot continue operation under these policies without disastrous harm to housing affordability,” according to a release from the National Multifamily Housing Council.
Originally posted on CNBC