How eviction moratoriums, renter bailouts just make housing more expensive

If you’re a landlord in Santa Clara County, the last few years have been difficult: pandemic-related lockdowns that forced tenants out of work, a federal eviction moratorium, and increasing regulations and rent control at the local level. Many landlords—especially those providing smaller single family home rentals or duplexes and quadplexes—are being forced to call it quits and sell off their affordable units to new owners who convert the property to single family homes. The result? Local real estate gets even more unaffordable, especially for lower costs renters.  Ryan Mills analyzes how government intervention goes awry in National Review.

Even though the Supreme Court ended the federal eviction moratorium in late August, rental owners in several blue states still are struggling under a bevy of state moratoria (which often have more teeth), and new tenant-friendly laws and regulations. Many local landlords increasingly are cashing in while the housing market is hot.

The United States already has a severe rental housing shortage. In fact, not a single state in the country has an adequate supply of affordable rentals for low-income renters, according to the National Low Income Housing Coalition. Industry leaders worry that a massive sell-off of single-family rental homes driven by record high prices and increasingly burdensome government regulations will make any already dire rental-housing situation substantially worse.

Single-family rentals are “the nation’s naturally occurring affordable housing,” Bob Pinnegar, president and CEO of the National Apartment Association, told National Review. “If we lose those units and people sell, we’re never going to be able to replace that housing stock.”

A National Rental Home Council survey conducted earlier this year of single-family rental home owners across the United States found that half had tenants who missed at least one rent payment since the beginning of the pandemic, and more than a third had to dip into their personal savings to cover shortfalls. Eleven percent of the respondents said they would be forced to sell at least one property, and 12 percent were liquidating all of their properties.

A recent survey of over 2,500 rental property owners in ten cities conducted by Harvard University’s Joint Center for Housing Studies found that 10 percent of all landlords collected less than half their yearly rent in 2020, with smaller landlords being the hardest hit.

The survey also found a 10 percent increase in the proportion of landlords who listed a property for sale in 2020. In Albany, NY, 22.5 percent of landlords listed a property for sale in 2020, up from 3.9 percent the year before. In Philadelphia, 20.9 percent of landlords listed a property for sale last year, up from 3.5 percent in 2019, according to the Harvard paper.

David Howard, executive director of the National Rental Homes Council, told National Review that the strong real-estate market over the past year was bound to incentivize some rental-property owners to sell. But government actions – federal and state moratoria that banned evictions of non-payers during the coronavirus pandemic, and state and local laws and regulations that, among other things, capped rent payments and limited how much landlords could screen potential tenants – have had the unintended consequence of driving more rental property owners to sell, he said. Many landlords feel like they have targets on their backs.

There are about 43 million rental housing units in the U.S., which may bring to mind images of big-city apartments in New York and Chicago, or sprawling suburban complexes

But the reality is more than half of those rental units, approximately 23 million – or 53 percent – actually are single-family homes and two-to-four-unit buildings, duplexes, and townhouses. And the vast majority of those 23 million units are owned not by large institutional investors, but by mom-and-pop small business owners who own ten or feweWhile large investment companies increasingly are scooping up single-family properties that they will keep on the rental market, most rental homes that are being sold are being purchased by people who intend to live in them, Howard said.

“There are just a lot more people out there who are looking to buy a home and live in it than there are large companies looking to buy your home and convert it to a rental,” he said.

Having more homes on the market may be good news for people who can afford to buy a house, Pinnegar said, but for every person that wants to buy and can afford an increasingly substantial downpayment, “there’s many others that simply don’t have that resource, and they’re priced out of the market.”

Read the whole thing here.

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