What to Expect After the Eviction Moratorium

Image via Flickr.

Since early in the COVID-19 pandemic, the CDC has ordered a federal moratorium on evictions from rental housing for nonpayment of rent. Depending on when you're reading this and even where you're reading this, I have no idea if that is still true for you.

You can be forgiven if you have whiplash from this week's headlines. As of July 31st, the federal moratorium officially expired, amid outcry from tenants' advocates and some members of Congress. On August 3rd, the Biden Administration announced a new emergency set of limits on evictions effective through October 3rd, applying to counties severely impacted by COVID-19 (which is most counties right now, thanks to the surging Delta variant).

Here's a good roundup of the details from NPR.

The CDC's moratorium was never the only game in town: many cities and states instituted their own pandemic-era restrictions on eviction. And in the wake of the federal expiration, some places scrambled to create or strengthen emergency local bans.

Here’s what this post is not going to be about: the legal or political prospects of the eviction ban. Does the CDC, a public health agency, have the right to make sweeping housing policy at all? Is the latest extension illegal, as the Supreme Court indicated in June? (Every advocate of the extension I've seen is fully aware of this and is explicit that forcing the issue to the courts is a stalling tactic to buy vulnerable renters more time.) Should it matter, given the unprecedented stakes right now? The specter of homelessness, for those who face it, is literally life-threatening, as the Delta variant surges.

This piece is, I repeat, not about the legality or the politics, so save your comments on that.

What I want to write about is the actual prospect of mass evictions and how to understand what it means. There's a lot of heat and not so much light to be found in the commentary out there right now.

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The particular drum I will forever beat here at Strong Towns is that the housing market is not a simple machine: input in, output out. It is a vastly complex system subject to wicked feedback loops as the uncoordinated actions of millions of people—landlords, tenants, sellers, buyers, investors—all affect each other. Mass eviction, both in and out of pandemic times, is best understood as a symptom of a system out of whack.

The eviction ban is a harm reduction policy in response to an emergency situation: the pandemic and the involuntary loss of work and income that many renters faced because of it. Like any blunt-force policy applied at huge scale, its distortions are only going to get worse the longer it is in place. An eviction ban does nothing to address the underlying conditions resulting in unpaid rent, and nothing to help landlords who are themselves in debt—reliant on rent to keep up with maintenance and pay a mortgage whose forbearance will soon expire as well.

A ban on evictions is not a permanent solution to anything about our housing dysfunction. No serious person thinks it's a permanent option. "What does a permanent solution look like?" is a many times harder question.

But that doesn't mean the exit ramp available to us right now is adequate, either. No serious person should think that millions of Americans losing their homes, or living in fear of losing them, is an acceptable outcome.

Here are some points and perspectives to consider:

Eviction was a big deal in America before the pandemic. It will be a big deal after. 

Eviction is a terrifyingly common feature of our housing system. I say "terrifying" because losing your home can be a traumatic experience whose repercussions last years, and which can lock people into a vicious cycle of the same poverty and instability that led to their eviction in the first place.

A 2015 study estimated that 1 in 7 children born in large American cities in 1998–2000 experienced at least one eviction for nonpayment of rent or mortgage between birth and age 15. Among those born into deep poverty, the figure was 1 in 4. These children are often exposed to bouts of homelessness, forced to move to a new school or otherwise had their lives and education massively disrupted. Eviction is an endemic feature of life in very poor neighborhoods in particular. The same study found that about 1 in 8 Milwaukee renter households was involuntarily displaced from their home in a two-year period. Records of formal eviction proceedings always undercount the actual toll of eviction, since many evictions never make it as far as the court system.

Eviction tends to brand those to whom it has happened with a scarlet "E." Even if you're not successfully evicted, many states make it easy to search public records for landlord-tenant disputes, and any history of such a court case can be used as grounds for a landlord to refuse renting to someone. In practice, a huge share of housing units are off limits to those with an eviction proceeding on their record. This makes it harder for them to find good, stable housing and perpetuates the cycle. 

Eviction as a mass phenomenon is a symptom of bigger problems.

The most obvious way to understand an individual eviction is as a function of the landlord-tenant relationship: I rent you an apartment, you owe me rent. You don't pay rent, you've broken your contract.

Mass or serial evictions as a societal phenomenon, though, are a symptom of bigger problems in the housing market. Scholars including, most prominently, Matthew Desmond (author of 2016's acclaimed Evicted) have argued that serial eviction is a profitable strategy for a subset of landlords in very poor neighborhoods to, essentially, exploit the desperation of their tenants. A landlord can maintain a revolving door of low-income tenants, evict those who fall behind on rent, and keep the security deposit.

This is an option because of certain conditions which are not inevitable. Property tax policies reduce the carrying cost of sitting on a low-quality, low-value home, making “slumlord” or “milker” behavior viable. State laws provide little recourse to tenants facing eviction in the form of a grace period or legal defense. And the housing market effectively does not serve the poorest Americans. According to the National Low-Income Housing Coalition, for every 100 extremely low-income renter households, only 37 homes affordable to those households exist.

The options that used to serve the very low income, such as boarding houses and single-room-occupancy (SRO) hotels, today are illegal almost everywhere; even mobile homes are greatly restricted. Over the past 40 or so years, the market has almost entirely stopped producing new "starter homes"—the size, and cost, of a newly built home has crept up and up and up, leaving those who can't afford one fighting over a dwindling supply of "naturally occurring affordable housing."

The lack of options available to the poor creates the situation in which landlords can readily evict a tenant struggling to make rent, keep the security deposit and know another equally poor tenant will be just around the corner.

A colossal number of Americans owe back rent due to the pandemic.

We are not in a normal situation. Even in places where COVID restrictions have expired, businesses have reopened, and employment is strong, the number of Americans who owe back rent because of earlier unemployment—most often during 2020's lockdowns and social distancing restrictions—is utterly unprecedented. The Center on Budget and Policy Priorities estimates that 11.4 million adult renters, or 16%, are not caught up on rent. For Black renters, that figure rises to 24%.

Getting your job back doesn't make that debt go away. And that debt puts you at risk of eviction.

Pandemic rental assistance has been a chaotic mess.

In December 2020, the federal government authorized $25 billion in rental assistance through the Federal Emergency Rental Assistance program. Another $21 million was authorized in March 2021. However, to date only 7% of that money has been distributed to its intended recipients. As David Dayen at The American Prospect reports in one of the best breakdowns of the issue, this fact is at the heart of the current prospect of an "eviction cliff." Why has the rental relief program—which should have eliminated most of the need for an eviction moratorium—been such a disaster? In two words: it's complicated. (I mean literally. It’s too complicated to administer.)

The federal government did not administer the rent relief program directly, but instead left it to states and localities to create literally hundreds of their own such programs from scratch in almost no time. New York State, for example, did not open its application portal until June 1, 2021. And in that first month, although the state received 120,000 applicants for rent relief, no money whatsoever was disbursed. The state’s own eviction moratorium is set to expire August 31st. In Texas, rent relief has been slow to arrive, and eviction court judges have proceeded to evict tenants who qualified for relief but simply hadn’t received the money yet.

In the absence of comprehensive rental registries, Vox’s Jerusalem Demsas argues that states were left with no clear way of identifying who is eligible for and in need of aid, and many individual tenants either didn’t know they were eligible or struggled to navigate the process of proving eligibility. An elaborate set of means-testing requirements has only exacerbated this: residents must demonstrate that they have experienced financial hardship due to the pandemic, or have an income below 80% of area median, and not be on other rental assistance.

The clock is ticking, and even a 60-day extension of eviction protections seems a short window for states to get their act together and actually help tenants pay off their rental debt accrued during the months of COVID shutdowns.

Image via Flickr.

Does the eventual expiration or invalidation of the CDC moratorium mean a tsunami of evictions is coming?

There is almost certain to be an uptick in evictions, and in fact we’ve already seen it in the window of time after the federal moratorium ended on July 31st. Paul Williams of the Jain Family Institute observed a 100% growth in eviction cases in Jackson, Mississippi, this week, in a state where tenants who lose an eviction case can be removed from their home same-day, and homeless shelters have little to no extra capacity. There are many places where a surge in evictions would overwhelm homeless services and result in a great deal of near-term human misery.

Whether there will be an unprecedented “tsunami” is less clear cut. 11 million Americans behind on rent will certainly not mean 11 million homeless Americans. Among others, Salim Furth of the Mercatus Center has argued since mid-2020 that, in practice, there is no evidence a “tsunami” is coming, and such an outcome would be in no one’s interest. “The vast majority of nonpayment cases are resolved through late payment, forgiveness, or negotiation,” Furth observed on Twitter.

The key to understanding why it's less clear is to try to play out in your mind what would actually happen if 11 million American tenants were all evicted in short order, with housing courts working overtime. (Assume the courts could even handle that kind of flood of cases without months-long backlogs, which they couldn't.)

You now have millions of empty houses and apartments to fill. This supply glut exerts a lot of downward pressure on rents, particularly if landlords keep up the (currently common) policy of refusing to rent to people with prior eviction records. A giant, chaotic game of "musical chairs" with many winners and losers would soon ensue. This puts many landlords, especially those in neighborhoods with weaker property markets or with lower-quality units, at risk of having a vacant unit for months on end instead of just one with a tenant who pays rent irregularly. Williams argues the effects are likely to play out differently in different places, even down to the neighborhood level.

In a complex system, what makes sense at the individual level doesn’t scale up linearly to the societal level. When an individual tenant is delinquent on rent, evicting them makes sense. When an enormous share of Americans are delinquent on rent, evicting them all makes no sense. Many landlords understand this and might be predisposed to come to an arrangement with their tenant, say forgiving a portion of the back rent owed.

Or maybe not. The whole scenario poses a sort of Prisoner's Dilemma problem, in which what appears rational for an individual landlord to do is very different from what happens if they all do it.

Market conditions matter, but aren’t everything.

The likely experience of a Cleveland is very different from the likely experience of a San Francisco. Multiple housing experts I spoke to in Cleveland earlier this year told me they did not expect a flood of evictions when the moratorium ended, because there are so many vacant homes in Cleveland, and so much slack in the city's housing market as a result, that landlords would rather hold on to a paying tenant. 

Research by Desmond suggests the serial eviction rate—landlords repeatedly filing eviction claims against the same household in order to collect rent and fines—is negatively correlated with vacancy rate: in other words, that “the repeat threat of eviction is deployed to a greater extent in tighter markets.” I’ve written before about how the vacancy rate is a measure of the balance of power between landlords and tenants: a lower vacancy rate will always favor landlords.

Market conditions, though, are not the only factor in this not-yet-post-pandemic moment. Laws also matter. The Wall Street Journal reports the South might be the region hardest hit by a wave of evictions, not because rents are highest or housing is scarcest in that region, but because of a lack of local moratoriums and generally landlord-friendly laws.

It also may matter what kind of landlord you have.

Institutional landlords and mom-and-pop landlords face vastly different incentives when it comes to eviction. To a small-time landlord, the quality of the relationship with the tenant may matter a lot more: you have more face-to-face contact with them, and may even live on or near the property. This means there’s incentive to negotiate an informal arrangement when rent is late.

There is evidence that corporate landlords, and in particular investment firms, are much more likely to evict their tenants, as well as to use threats of eviction as a routine business practice. Many are faceless to their tenants, even going so far as to automate both rent payment and eviction filings.

Corporate owners with investor backing have also reportedly faced recent pressure from those investors to accelerate eviction filings.

Eviction moratoriums may hurt mom-and-pop landlords and favor corporate ones.

Mom-and-pop landlords play a larger role in America’s rental housing market than is often realized. 48% of rental units are in 1–4 unit buildings; of these, small-time owners manage 77% of them.

One of the scarier potential long-term effects of eviction moratoriums (federal and state/local) is that they could have punishing effects on small landlords, many of whom have a mortgage to pay on the property themselves. This could ultimately drive many of them out of business and increase the consolidation of real estate in corporate hands. (In turn increasing eviction pressure and reducing renters’ recourse against eviction, as observed above.) A CNBC report in June said as much: the moratorium is “killing small landlords.” CNBC quotes the head of a landlords’ organization arguing that these small businesses should have been treated fundamentally differently from large ones, including by making them eligible for the Paycheck Protection Program (PPP) loans that bailed out the likes of restaurants and bars.

There are other reforms on the table that are worth watching.

Mass eviction is ultimately not a problem that is going to yield to a silver-bullet answer. Many local reforms were underway before the pandemic, and some of them have gotten a kick start from the unusual circumstances of the pandemic.

Access to legal counsel is a main thrust of many efforts in this area, and an important one if your goal is to keep people in their homes who will be gravely harmed by losing them. A 2013 study in New York City found that providing legal counsel to tenants was associated with a 77% decrease in the number of cases resulting in a warrant for eviction.

As far as the pandemic situation goes, the Mercatus Institute's Furth recommends three measures which, in combination, would do a lot to limit the effect of an "eviction cliff." States and localities, Furth writes, should simultaneously (1) encourage renegotiation of rent between landlords and tenants, and provide model agreements to facilitate this; (2) explicitly limit the pace of evictions through the housing courts and prioritize those which involve violence, nuisance, and property damage over those limited to nonpayment of rent; and (3) create financial rewards to landlords for rent forbearance.

Bloomberg reported recently that Philadelphia has explored an “eviction diversion” program to send cases to mediation instead of housing court, with the hope that landlord and tenant will reach a negotiated settlement. The program has already produced 1,500 successful settlements out of 2,300 mediations.

These experiments and many others are worth watching.

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