I saw yesterday that there has been a court ruling regarding the ban on evictions that was imposed due to COVID, which struck down the ban. This is one of the after effects of to response to COVID that isn't talked abut much and which will possibly/probably end up being worse that anyone imagined.
At first glance, the notion of preventing landlords from evicting people because of the government response to COVID seems like a compassionate and nice thing to do. At least it's nice for the renters. But as for the rich landlords, well screw them.
Let's start with the obvious. People who own rental property do so to make money. However, they first have to pay their expenses. Most likely they have a mortgage or LOC on the property, they are also required to maintain the property to at least the standards required by the city the property is in. They have insurance, assessments, a savings account to pay for major repairs of improvements, and other costs they bear. The money for those things comes from the rental income. Unfortunately the eviction moratorium (at least in MN) doesn't require that the renters continue to pay rent, nor that they make up any back rent. So, you have landlords with reduced income but the same expenses, forced to allow renters to live for free in their property. For over a year.
Now if the Federal and State governments had agreed to make the landlords whole during this period, we probably wouldn't be concerned (beyond the massive increase in the deficit), but the various governments decided that the property owners should bear this burden alone.
So let's jump ahead to the point where this moratorium ends, what happens then.
1. Instead of a smaller group of people being evicted each month and "trickling" back into the rental market, you now have a "flood" of people that all hit the market at once.
2. The rental market over the last few years has been marked by high demand, low supply, and rising prices with make it difficult for lower income people to find affordable places to live.
3. The people who own rental property and who've been living with reduced or no income for over a year will properly raise the rents they charge as a way to recoup their losses.
4. Or they will be forced to sell in a market where prices are increasing weekly, which will also result in higher rents.
5. Various jurisdictions will likely try to legislate caps on rent or rent increases, which will likely force some property owners to sell as they are unable to make a profit with artificial caps on rent.
6. Many cities have made the construction of new affordable housing impossible due to the various zoning limits and permit fees.
I'm sure there will be more results that I missed here, but the big takeaway is that the lower end of the rental market is likely to be a giant shit show within 60-90 days of the removal of the moratorium.
Just one more thing to thank our governments for.
