When the coronavirus outbreak first erupted, millions of jobs were shed within weeks, instantly causing tenants to fall behind on their rent. Recognizing the potential for a massive homelessness crisis, lawmakers put a federal eviction ban into place barring landlords from kicking tenants out based on the nonpayment of rent.
Earlier this year, when the economy improved and jobless claims started to fall, it seemed like that ban would potentially run out at the end of June. But lawmakers opted to extend it yet again, this time until the end of July. And while there's talk that this most recent extension will be the very last, things could change as states contemplate imposing new restrictions in light of the highly transmissible Delta variant that's caused an uptick in COVID-19 cases most recently.
If new restrictions are put into place and businesses can't fully operate, more jobs could be lost, hindering our overall economic recovery. This could also make a case for extending the ban on evictions for another month or longer.
In fact, there's already pressure to extend that ban even though states have been exceedingly slow to distribute rent relief funds. There's a $45 billion pot of money earmarked for rent relief, and its purpose is to help tenants avoid eviction. Delaying the end of the federal ban would give that program more time to do what it's supposed to do.
Regardless of whether the eviction moratorium gets extended another month (or longer), the damage to landlords has already been done. In fact, many real estate investors who make their money collecting rent have been forced to change and pursue other opportunities, given the events of the past year.
Landlords are being driven out
Landlords who own between one and five single-family rentals make up 88% of the almost 15 million single-family rentals across the country. In light of the eviction bans put into place at the start of the pandemic, 11% of these landlords have sold off at least one property in their portfolios, and 12% have sold off their real estate holdings in their entirety.
That's bad news not just for those landlords who now need to rethink their primary revenue source but also for renters.
If too many mom-and-pop landlords are driven out of business, property management firms with more capital are apt to come in and take over. That could, in turn, lead to a general increase in rent prices and exacerbate the existing affordable housing crisis.
The Millionacres bottom line
While landlords have been entitled to some protection during the pandemic -- namely, the option to put their own mortgages into forbearance -- that aid has clearly fallen short for a lot of people, forcing them to unload properties and seek out new opportunities. And the longer the current eviction ban is extended, the more that percentage could grow.
Lawmakers will need to decide soon whether to give renters more of a reprieve or finally put an end to the ban on evictions. Some states, however, have their own extended protections in place so that even if the federal ban is lifted on July 31, landlords may still need to wait months before moving forward with evictions and replacing nonpaying tenants with those who can cover their rent.