A "perfect storm" for vulnerable renters?
On the surface, government stimulus efforts may seem to be keeping a pandemic economy relatively stable. Unemployment benefits are paying at all-time highs, average income and savings rates have both increased, all while many renters are protected from eviction in major metro areas and federally financed properties. However, with the CARES Act's unemployment benefits slated to end in August and many eviction bans ending even sooner, some experts worry the combined effect may result in a "tsunami of evictions," culminating in a full-on housing "apocalypse" for renters.
Why they think it's coming
People are missing payments, and they may miss more. A June housing report showed missed rent payments had stabilized with about 1/3rd of renters being unable to cover their rent in full. And the forecast for coming months doesn't look much brighter, as 1 in 5 adults polled in an UrbanWire survey said they had little-to-no confidence they'd be able to pay rent this coming month. This leaves a large segment of our population in a vulnerable position, should eviction bans be lifted anytime soon.
Eviction numbers were already high, with more than 2 million people facing eviction each year prior to the pandemic. More evictions were filed during 2016 than during 2008's housing crisis, making the idea of major growth in evictions something truly unprecedented.
The pandemic has been hitting renters harder. Jobs at businesses most negatively affected by COVID, such as administrative, hospitality, and service industries, are dominated by renters. And with reopening an ongoing process, while some businesses closed permanently, these renters may still be in limbo and without a source of income when protections run dry.
What might happen if it comes
The severe loss of wealth that accompanies an eviction can become multi-generational. Even a single eviction can ruin a person's credit for years, increase the likelihood of family separation, and create financial instability that damages the future income opportunities of the evicted's children, too.
Mass evictions would immediately mean higher levels of homelessness, an ongoing issue that studies seem to indicate was growing worse over the past few months, even with eviction protections in place. And being homeless has never been more dangerous: these same people would be thrown onto the streets in the midst of a pandemic.
The crisis could also further widen disparities in income and housing among races. UrbanWire data also revealed that nearly 50% of Black renters felt little-to-no confidence about paying rent in June, more than double the rate of White renters, meaning that a wave of evictions will only increase inequality at a time of mass civil unrest.
Why it still might not happen at all
Landlords may be unwilling to bear the substantial costs that they also incur when deciding to evict, which can add up to an average of $3500. Instead, many owners may count on lost jobs, of which as many as 8 in 10 Americans believe to be temporary, returning to their tenants and collecting a portion of rent in the meantime.
There are agencies and nonprofits stepping up: activists organizations like the National Low Income Housing Coalition are already working to extend protections and help connect people to federal rental assistance, giving vulnerable renters much-needed time to get back on their feet as businesses rush to reopen and rehire.
The recovery might get here first: a majority of economists surveyed by the Wall Street Journal believe our economy will be growing again by Q3 (September) 2020, rounding out the year with unemployment rates below 10%. And 1 in 4 economists already think our economy is rebounding at this very moment, providing some much-needed optimism in the face of a very uncertain summer.