The moratorium on evictions imposed by the U.S. Centers for Disease Control was consigned to the dustbins of history by a divided Supreme Court on Aug. 26, about two months before the much-extended expiration date of Oct. 3.
That means -- unless your state or city has their own eviction moratoriums in place like California does until Sept. 30 -- if you're a landlord with delinquent tenants in your rental properties, you can probably go ahead and start eviction proceedings.
How much that will happen and how much effect that will have on a hot rental market in many cities remain very open questions.
As our own Sara Rutledge explains in detail in her article "End of Eviction Moratoriums Has an Uneven Impact on Renters," such measures have had different impacts in different areas. Factors include how moratoriums have been enforced, how much of the billions in rental aid actually made it to landlords and tenants, and how well local folks can afford local rents.
The latter issue is encapsulated in an Aug. 23 report from Smartest Dollar titled "U.S. Cities With the Largest Renter Wage Gaps [2021 Edition]."
A big gap in the rent gap -- from Berkeley, California, to Birmingham, Alabama
The report's authors analyzed federal data from multiple agencies to calculate the gap between renters' actual estimated wages and the wages they need to make to afford the median rent for a one-bedroom rental in each location without paying more than 30% of their income.
The report divided the country into large, medium, and small markets and ranked the top 15 with the largest gap in each category. Naturally, expensive coastal markets showed the largest gaps.
The biggest gap in the big cities is in San Francisco-Oakland-Berkeley, California, where the renter wage gap is -54.9% in a market with a median rent of $2,510 for a one-bedroom unit, an hourly wage of $48.26 is needed to afford it, and an estimated hourly wage of $21.77 is actually being earned.
Even number 15 in the biggest markets showed a significant gap. That would be Birmingham-Hoover, Alabama, where the renter wage gap is -41.3% in a market with a median rent of $939 for a one-bedroom unit, renters must earn $18.07 per hour to afford it, and an actual estimated hourly wage of $10.61 is what they are making.
Among medium markets, the five biggest wage gaps were in:
- Santa Maria-Santa Barbara, California (-63.8%)
- Oxnard-Thousand Oaks-Ventura, California (-52.2%)
- Salinas, California (-52.1%)
- Naples-Marco Island, Florida (-50.9%)
- Santa Rosa-Petaluma, California (-48.9%)
Among small metros, the five biggest wage gaps were in:
- Santa Cruz-Watsonville, California (-67.8%)
- Atlantic City-Hammonton, New Jersey (-54.8%)
- Barnstable Town, Massachusetts (-53.0%)
- Burlington-South Burlington, Vermont (-53.0%)
- Sebastian-Vero Beach, Florida (-50.0%)
The Millionacres bottom line
The pandemic has led to sharply rising prices for renters and homebuyers alike -- and for the former has worsened a long-standing problem. The Smartest Dollar points to a recent report by the National Low Income Housing Coalition that found median gross rents rose faster than median rental household incomes between 2001 and 2018 in 45 states and Washington, D.C.
As for the moratorium, whether its expiration results in a society-shaking wave of evictions very much remains to be seen. (The same can be said of the potential for a surge in mortgage foreclosures when forbearances expire.)
From a real estate investor's perspective -- besides it just being better for everyone for as many people as possible to have safe, affordable housing -- investors looking for sustainability in their own portfolios might want to focus their activities, when possible, on markets where it's most likely their tenants can pay the rent. This info can help guide that search.