Effects of eviction bans linger in housing market

James McGilberry, 68, lost his job as a hotel day manager last fall due to the pandemic. He and his wife live in an apartment in Pasadena, Texas, and McGilberry said his landlord agreed to accept half rent. But as McGilberry struggled to find another job, the landlord grew impatient, and in April filed for eviction. McGilberry said he applied for rent assistance from the state of Texas, but the state overpaid the landlord for July. Instead of allowing the excess to cover future months, the state demanded the money back.

McGilberry said he has since found a job doing apartment maintenance that starts in January. But he is still behind on rent. “We ain’t been doing good,” he said. “[My wife]’s been sick, and I’m having to get out at my age and get back doing the manual labor that I was doing when I was 40 years old.”

Since the Supreme Court ended the federal government’s pandemic eviction moratorium on Aug. 26, the number of people being removed from their homes has increased in most major U.S. cities but has not yet risen to pre-pandemic levels. Landlords who suffered unprecedented expenses and debt under federal and local eviction bans are starting to try to recover and figure out what to do next. The long-term consequences of the moratoria could include fewer affordable housing options for U.S. renters.

On Dec. 7, the National Housing Law Project reported results from a survey of 119 legal aid and civil rights attorneys in 41 states. Sixty-six percent said they saw evictions increasing since the federal moratorium ended. The report quoted a Kentucky attorney, who said, “A housing authority in my area is evicting HUD tenants strictly for nonpayment, even when rental assistance is pending. They refuse to fill out their portion of the [rental assistance] applications.” Eighty-six percent of respondents said they were seeing landlords collect rental assistance funds and move forward with eviction proceedings anyway. A Florida attorney said, “We are seeing some landlords refuse to participate or respond to [rental assistance] invites as a delay tactic to collect late and other fees since they know some programs will cover them.”

Princeton University’s Eviction Lab tracks evictions in six states and 31 cities. Its data also show eviction filings rising slightly after the moratorium, but the total number remains below historic averages. Census Bureau data from early October show 16 percent of adult renters are behind on rent payments, and about 30 percent say their landlords will likely evict them in the next two months.

Meanwhile, smaller landlords have spent hundreds of thousands of dollars of their own money on maintenance and mortgage payments because tenants stopped paying rent but refused to leave. New York landlord Michael Reid had to pay tenants to leave so he could sell three of his houses. He has lost more than $100,000 in rent and more than $20,000 in unpaid water bills. Reid took out a $90,000 loan to pay bills and property taxes. In August, he finally received money from a rent assistance program—just $9,000. Boston landlord Rick Martin left most of his units vacant during the moratorium, losing thousands in rent. “I did not want someone moving in whom I could never get rid of if they didn’t pay rent,” he said. He ended up selling two of his five buildings. The buyer turned one into condos, and the second building’s new owner doubled the rent.

In July the National Apartment Association filed a complaint against the United States for the eviction ban. They said the ban “subjected property owners nationwide … to an extended government-authorized physical invasion, occupation, or appropriation of their private property by third parties without compensation.” Landlords in New York are especially desperate since Gov. Kathy Hochul again extended the state’s eviction moratorium ban through Jan. 15, 2022. More than 30 landlords sued to stop it.

Attorney Jaime Michelle Cain told WIVB-TV of Buffalo, N.Y., that the standard is unreasonably high: Landlords must have a “good faith belief” that the tenant is not experiencing hardship before evicting. Some landlords “have gone on social media, and they have seen a tenant has traveled somewhere … some landlords have ‘dumpster dived’ and are able to pull out packages that are coming to someone’s house routinely,” said Cain.

After a slow rollout, the government’s Emergency Rental Assistance funds—totaling about $46.5 billion—are reaching more renters. While just $5.1 billion had reached bank accounts by July, now that number is more than $16 billion, according to the National Low Income Housing Coalition. The funds go to state and local governments, which created programs to vet applicants and award money. Grantees were often creating these programs from scratch. Once they were up and running, they faced the challenge of raising awareness: A May survey from the Urban Institute found that 40 percent of landlords and 57 percent of tenants didn’t know rent assistance was available.

On Oct. 4, Deputy Treasury Secretary Adewale Adeyemo sent a letter urging the grantees to get assistance out as fast as possible and warning that the government would reallocate funds from low-performing to high-performing recipients. Adeyemo said the government would require those that hadn’t distributed at least 65 percent of the first round of funding by Sept. 30 to cooperate with an improvement plan.

Manhattan Institute scholar Michael Hendrix advocates targeted rent assistance and a free market for housing to give renters the best protection. In September, he wrote that small property owners losing rent income are more likely to sell to larger firms, which are more likely to raise rent. In the long run, the already too-small supply of affordable housing in the United States could decrease.

“America’s evictions crisis is a housing crisis rooted in a decades-long mismatch between supply and demand. This country is 6.8 million homes short of what we need to keep up with demand and decay,” wrote Hendrix. “A lack of housing means fewer options for renters facing eviction. Worse yet, the longer eviction moratoria last the likelier it is that landlords hike rents to recoup losses and we make new affordable housing riskier to develop.”