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America’s next housing crisis

With more than 20 million Americans still unemployed, and eviction moratoriums about to expire, America faces a new housing crisis.

Millions of households suffering income loss from Covid-19 can’t pay rent.

Moratoriums and one-time stimulus payments provided some temporary, short-lived relief; and the next round of Covid-19 relief — called the HEROES Act — would provide more than $100 billion of rent relief to keep renters and landlords afloat.

It’s supported by both tenant advocates and property owners, but is stalled in the GOP-controlled Senate. If nothing is done, courts will be inundated with eviction filings when they reopen for business.

Being evicted is traumatic, destroys the renter’s credit, makes it difficult to secure new housing, and often results in loss of personal belongings. Read about the many pernicious effects of eviction here. An eviction crisis would predominantly affect low income families and people of color, who already bear the brunt of Covid-19’s adverse economic impacts.

A movement calling itself “Cancel the Rents” advocates forgiving rent and mortgage payments owed by tenants and landlords “for the duration of the crisis.” (Their website is here.) They argue most Covid-19 relief has gone to Wall Street, big banks, and corporations instead of the unemployed and needy, and that money should instead by used to keep the latter in their homes. Their solution uses government money to make landlords and mortgage lenders whole.

There also is a “rent strike” movement based on the argument that shelter is a human right regardless of ability to pay. But somebody still has to pay for it; there’s no such thing as a free house or apartment, unless you’re talking about a cardboard box or abandoned shipping container.

That “somebody” should, by all rights, be the government, which ordered the business closures that put all these people out of work. Providing free housing to tenants is an unfair and impossible burden to place on landlords. Even if that burden is passed through to mortgage lenders, somebody is still out of a lot of money, and we saw in 2007-2008 that a mortgage crisis can pull down the entire economy. That’s because ~80% of household debt in the United States is mortgage debt. (Note: This is why a crisis in subprime auto lending, or credit card loan defaults, wouldn’t have the impact the mortgage crisis did; those loan pools simply aren’t large enough to crash the entire economy.)

What’s needed is for the Senate to step up and pass rent relief, and do it now. What’s proposed may not be enough — it likely won’t be — and Congress should be prepared to do more later, as needed. But Congress must do something now. A wave of mass evictions will devastate families and communities, and also landlords and mortgage lenders, because vacant properties produce no cash flow.

If Congress doesn’t act, America will be saddled with distressed tenants, landlords, and lenders — and perhaps another housing crash that drags the entire economy down.


2 Comments Add Yours ↓

  1. Mark Adams #
    1

    Part of what should happen is a lot of politicians in office today should be shown the door come November. At least those up for election and one can hope voters memories are long enough to remember when the others come up for election. I do mean politicians of both parties and more so at the state level as frankly it has been a few state governors most responsible for the shut down and length of it and the continuing slow reopening. It is how things are supposed to work in this American democracy in fact some should be so ashamed they don’t run for reelection, but unfortunately most will remain in office after November.
    Of course there is no connection between the people in the streets and Corvid. Or are the connections? Is black lives matter a way for the folks at the top to play groups off each other as in one of Marx’s criticisms of capitalism. Was the whole corvid crises just a green light for a gigantic theft from America that put billions and trillions in a few pockets. That will put billions more in those same few pockets.
    Maybe the corvid shut down experiment has been an unmitigated disaster, but one that was entirely predictable, and there are not enough billions or trillions that can be printed out to stumble through this created disaster of government creating winners and losers.

  2. Roger Rabbit #
    2

    I will vote for candidates who will deal with the Covid-19 crisis in a responsible manner. Over 120,000 dead blows away the argument it’s a hoax. We’re now seeing spiking new cases, ICU hospitalizations, and deaths in states whose governors pushed for early reopening. Those are the governors who should be voted out of office, because their policies are literally killing people. The economic losses can be dealt with through government aid, but McConnell and his Senate Republicans are blocking $3 trillion of additional aid approved by the Democratic-controlled House. Who do you want in charge of this crisis, grownups or science deniers who believe conspiracy theories, refuse to wear masks or social distance, and would sacrifice your parents to reopen the economy?



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