After President Donald Trump slammed the brakes on negotiations for a new stimulus bill, landlords and tenants are bracing for an economic cliff as people fall farther behind on rent, forcing property owners to evict tenants — or face a financial downfall when they can’t make their mortgage payments.
“To the extent [unemployment payments] are reduced or go away, you have an immediate housing crisis,” said Representative David Price, a Democrat representing North Carolina’s Fourth District and Chairman of the House Transportation, Housing and Urban Development Appropriations Subcommittee. “I am certain as other components of support run out or diminish, the housing can only get worse.”
The Democrat-controlled House of Representatives passed a $2.2 trillion package last week that included $50 billion in emergency rental assistance funds and banned evictions for another 12 months. But the Republican-controlled Senate “skinny” stimulus bill did not include rental assistance funding or any ban on evictions. It also did not include another round of stimulus checks, though Trump tweeted Tuesday that he would sign a standalone bill to issue additional $1,200 stimulus checks “to our great people.”
Roughly 10 to 14 million renter households, or 23-34 million people, were behind on their rent by Sept. 14, according to a September report released by the National Council of State Housing Agencies. That amounts to $12-$17 billion in unpaid rent.
That figure is estimated to rise to $34 billion in past due rent in January after the expiration of an eviction moratorium from the Centers for Disease Control and Prevention that provided an emergency path for tenants to claim rental relief if their income was impacted by the coronavirus.
But the eviction moratorium, aimed at keeping people in their homes to stem further infections, only created a financial cliff for landlords and tenants alike, according to Nick DiNardo, managing attorney with the Legal Aid Society of Southwest Ohio. It requires renters to proactively notify their landlord that they cannot be evicted. However, without an attorney, those arguments are difficult to hold up in court, which has left renters facing eviction despite a national order against it, he said.
Ohio is one of several states that does not have a state moratorium on evictions. Ohio’s major cities — Cincinnati, Cleveland and Columbus — together have seen more than 10,200 evictions filed since the beginning of the pandemic in March, according to the Eviction Lab at Princeton University.
In the absence of a state moratorium, federal housing assistance has been crucial to keeping people in their homes and out of homeless shelters, DiNardo said. The halt in negotiations over another stimulus bill has shaken attorneys and advocates in Ohio who are now bracing for a deluge of eviction cases coming down the pike.
“It’s creating this kind of dam that will burst in January when those cases go back to court for those who aren’t able to get emergency assistance for rent they still owe,” said DiNardo. “They won’t be able to pay 6 months of rent unless they get emergency assistance.”
Earlier Wednesday morning, DiNardo represented a mother of four children in housing court to delay an eviction proceeding against her. She lost her stable job in customer service after the coronavirus struck the state, and she has been supporting her children on $170 weekly unemployment checks, he said. With the delay in an eviction, his client has bought some time to find work before December rent is due. But it is unclear if she will.
“On top of our more usual tenants, we’re seeing a lot of people out of work who are working class and lower middle class and have burned through savings and have never asked for help before,” DiNardo told NBC News. “It reminds me of the (2007) foreclosure crisis where we had all these folks who were middle class losing their homes.”
At the other end of the crisis are landlords, many of whom are small property owners, who are facing mounting financial pressure to keep buildings running as tenants fall farther behind on rent. About 92 percent of apartment households did make a full or partial rent payment by Sept. 27, the National Multifamily Housing Council found. But among a survey of members of the National Association of Hispanic Real Estate Professionals, small landlords are facing a darker financial picture.
More than 80 percent of survey respondents, who own or manage buildings with fewer than 20 units, reported a decline in their rental income compared to the first quarter of the year, according to the Terner Center for Housing Innovation at the University of California, Berkeley. One in four landlords said they borrowed funds to make ends meet and nearly two in five doubt they can make ends meet over the next 90 days, it added.
At least 26 state and federal lawsuits have been filed by property owners this year challenging the CDC’s eviction moratorium, according to the Associated Press. The National Apartment Association, a trade association representing the rental housing industry, joined a federal lawsuit in September that argues that the CDC’s order is overreaching because federal agencies do not have powers to waive state laws. Instead, the organization is putting pressure on the federal government for relief.
“Passing relief measures like direct rental assistance should not be a political game,” said Bob Pinnegar, president and CEO of the National Apartment Association, in an emailed statement. “Emergency rental assistance is the only policy that will keep renters safely housed and ensure rental housing providers can pay their bills.”
When landlords fall behind on rent, it could have detrimental impacts on the number of low-income housing units available for renters, said Diane Yentel, president and CEO of the National Low Income Housing Coalition.
“Many of these small landlords don’t have access to credit, so they can’t borrow the money they need to pay bills,” Yentel said. “The concern is that landlords might decide to sell property or walk away — and the last thing we want to do is end the crisis with renters saddled with more debt.
For some people caught up in the political rhetoric, the White House’s call to end negotiations over another stimulus bill may have snarled Trump’s chances of winning the November election.
Destiny Jobe is a college student who lives with her partner in Wilmington, North Carolina. The couple received a 30-day eviction notice on Tuesday. If they don’t complete the rent payment by next week, they will be forced to leave their home, Jobe told NBC News.
“I never thought I would see the day that the current United States President essentially blackmails the country to vote for him with the promise of one more stimulus check,” she said.
“I was already going to vote for Biden this year, and this situation just added another reason for me to vote [Trump] out.”