Economists say America is on the brink of another housing crisis as rent debt reaches $7 billion.

The coronavirus and the resulting historic spike in unemployment have pushed millions of Americans to the brink, with homeowners and renters alike worrying about their housing security. However, unlike the previous economic downturn in 2007, renters have fared much worse this time around as local and state governments prepare to lift eviction moratoriums at the end of the year.

According to a Wall Street Journal report published Tuesday, a wave of mass evictions is set to hit the apartment and single-family home rental markets as the outstanding rent debt surpasses the $7 billion mark. If Congress fails to pass another coronavirus stimulus package before years’ end, Moody’s Analytics told WSJ Americans’ outstanding rent debt could skyrocket to $70 billion —  resulting in a housing crisis that could rival what homeowners experienced 13 years ago.

“Federal and local eviction moratoriums have protected many of them from losing their homes if they missed payments during the pandemic,” wrote WSJ reporter Will Parker. “But the national eviction ban and some state and city protections are set to expire by January or sooner.”

“Renters will then be on the hook for months of missed payments, which even those who have jobs could struggle to pay,” Parker continued. “Estimates of total outstanding rent debt vary widely. Yet by any measure, the fallout from missed rent payments is bound to imperil a large swath of the U.S. population and wash over the broader economy.”

The average American renter owes $5,400 in back rent, the report said, with women, people of color, and low-income households at the highest risk of eviction. In California, Black and Latino renters are twice as likely to face housing and rent insecurity than their white counterparts — a trend that holds up in other metros across the country.

To survive, renters have been turning to credit cards to make rent payments, which compounds the amount of debt they’ll have to pay once the moratorium lifts and all back payments are due.

“These households will have to make some pretty massive financial choices and pull back on other spending to pay their rent,” Moody’s Chief Economist Mark Zandi told WSJ. “That’s a hit to the economy.”

“Even if now they are able to make their rent payment that huge inflation to their credit-card debt has become a new threat to their budget and their ability to cover all their expenses,” Money Management International financial counselor Kate Bulger added. “If [they] don’t pay it back that can escalate to things like judgments, potential garnishments against [their] wages.”

Right now, millions of imperiled renters are counting on The Centers for Disease Control and Prevention’s nationwide eviction moratorium that prevents landlords from evicting tenants who meet a number of requirements, such as being eligible for a CARES Act stimulus check, using their “best efforts” to make partial payments, and proving that an eviction would lead to homelessness.

As the CDC eviction moratorium deadline nears on Dec. 31, renters, landlords and their respective advocates are waging legal battles about the morality of evictions during a global pandemic, when and how back rent payments should be repaid, or if the federal government should step in and effectively cancel rent for millions of Americans by paying the bill themselves.

Landlords in multiple states have already found ways to begin or carry out the eviction process despite CDC rules, as evidenced by Florida and New York’s varying stances on evictions. While New York Governor Andrew Cuomo is working to extend renter protections through its Tenant Safe Harbor Act, Florida Governor Ron DeSantis has allowed the statewide eviction ban to expire — a move that some landlords are using to circumvent the CDC mandate.

“There are some hoops tenants have to jump through to be protected by the CDC suspension,” tenant advocate Eric Hauge explained in a previous Inman article about an app that helps landlords carry out evictions.

“The CDC moratorium has some holes in it,” Center on Budget and Policy Priorities Housing Policy Vice President Peggy Bailey added in another Inman article. “Landlords can still move for an eviction if they come up with a reason other than loss of income due to the pandemic, and it’s on the resident to prove the landlord wrong.”

Lobbyists and lawyers who support landlords’ rights are using the loopholes to file state and federal lawsuits arguing against the legality of federal, state or local eviction moratoriums, citing a “flimsy premise” that stopping evictions will prevent renters from contracting the coronavirus.

However, tenants advocates are pushing back: “To understand, ask yourself the question: Why would a landlord want to start eviction proceedings in October for an eviction that can’t happen until January? The answer: to pressure, scare and intimidate renters into leaving sooner,” National Low Income Housing Coalition President Diane Yentel said in a previous Inman report.

As renters and landlords battling for their respective rights, various national housing organizations such as The National Association of Realtors, are lobbying for a federal bill that would help renters and landlords navigate a fraught economic landscape.

“NAR understands the economic distress COVID-19 has caused people across the country, and we applaud efforts to keep families in their homes,” NAR President Vince Malta told Inman in a written statement on Oct. 13. “But while this eviction moratorium provides temporary relief to families, it places huge burdens on housing providers whose financial obligations remain as the pandemic endures.”

“NAR maintains regular communication with the White House while we press Congress to enact emergency rental assistance legislation through whatever vehicle necessary,” Malta added. “We must not allow a short-term emergency for renters to become a prolonged, national economic crisis, and the only way to protect renter households is through rental assistance programs for housing providers.”

Housing experts and advocates say we have little time to stop an impending rental housing crisis, and the main tool needed to create expansive, effective, and non-loophole-ridden local, state, and federal policies is reliable data. In September, renowned housing law expert Yuliya Panfil told Slate a lack of reliable data is preventing legislators from creating policies that fully grasp the scale of the eviction issue.

“In short, local policies, differences in institutional capacity, and a lack of standardization across jurisdictions countrywide lead to a frustrating inability to pull together housing loss data in any meaningful way,” Yanfil explained while pointing to the various ways jurisdictions handle and record evictions. “This has serious implications. For one, without knowing how many people are losing their homes and where they live, municipal leaders can’t prioritize housing aid and outreach.”

“If we’re going to solve America’s housing-loss crisis, we have to start with fixing the data,” she added. “We need national eviction and foreclosure databases.”

Until legislators create a comprehensive policy that benefits renters and landlords, both groups are in limbo, with each of their futures leading toward possible disaster.

“I’m not sure where this will leave me,” renter and single mother Isis Bouzy told WSJ. “I want to be a homeowner one day, and an eviction won’t look good.”

“Am I concerned that some tenants will leave me holding the bag? Yes,” New York City landlord Robert Nelson added in the same article. “But what choice do we have?”

Email Marian McPherson

coronavirus | rentals
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