The section titled "Eviction moratoriums may hurt mom-and-pop landlords and favor corporate ones" is absolutely true, and it will result in even more wealth concentration.
I have a family member who had the misfortune to rent out a house he previously lived in (he was moving and due to some issues in the neighborhood wanted to rent his old house out for a year before selling) in Feb of 2020. I think his renter paid one month of rent, and then nothing after that. And I looked the guy up, I have sympathy for people who are really on hard times or who lost jobs but this dude is a grifter who is just taking advantage of the situation.
So he's lived there coming on 18 months paying absolutely nothing. My relative was fortunate enough to get a good dose of rental assistance (as this article said, the process was extremely chaotic), but I guarantee he will never be a landlord again. The risk/rewards of a tenant/landlord relationship used to feel well known, but now it feels like the government can basically commandeer your property at will.
So this means you are just going to be left with large corporate landlords who are diversified enough that they can take the risk. And what makes me so angry about this is that, as someone who is generally on the "left" side of the political spectrum, I see all these calls for "cancel rent", as if housing grows on trees and landlords are all some kind of Ebenezer stereotype, instead of being a lot of small-time folk just trying to get by.
>but now it feels like the government can basically commandeer your property at will.
This is one of the scariest outcomes of the eviction moratorium. It is basically solidified the fact that you own nothing and the government can take and do with "your" property as it pleases when it pleases.
>you are just going to be left with large corporate landlords who are diversified enough that they can take the risk.
Again, so very true. Why do people think that big corporate landlords are going to be better than the small mom and pops they killed off? Soon everyone who rents will be paying to large kafkaesque monolith who makes you wait on the phone for 5 hours every time you have a problem.
> This is one of the scariest outcomes of the eviction moratorium. It is basically solidified the fact that you own nothing and the government can take and do with "your" property as it pleases when it pleases.
Well, but it's property you've rented out to someone else. IMO, once you've done that, it doesn't truly belong to just you, even if the deed is in your name. Someone else has set up their life in your space—and that's why most localities have laws about when you can evict someone and the process you have to go through.
> now it feels like the government can basically commandeer your property at will.
I understand it feels more salient now, but the government basically always could.
They will take it over late tax payments amounting to a tiny fraction of the value.
They will take it to sell it to developers, who may not ever build anything there.
Cops will hound you until you leave if you meet some pre-crime criteria.
Or take it outright, if you rent to someone who cultivates illegal vegetation.
Or destroy it, chasing someone who might not even be in it, and you will not be reimbursed for this sort of 'taking'.
I get that the eviction thing seems new, and the goal is actually somewhat novel. But 'property rights' have never been as strong as a lot of people think.
(All of those things have happened fairly recently. I'm not going to spend the time finding a pile of links nearly everyone is just going to skip over.)
For what it's worth it's not like there's absolutely zero recourse. If the person is a grifter, in the sense that he actually does have money and just doesn't feel like paying, he can usually be pursued in civil court for the balance and a judgement can be entered.
Sure if the person has no assets at all or declares bankruptcy then that won't help. But in that case he's in the category of people that don't have any money.
I think a lot of people are unaware that there is a distinction between an eviction proceeding, which is a proceeding seeking the equitable remedy of dispossessing someone from a property, and a proceeding for damages, where you try to recover the money they should have paid you.
Eviction proceedings are typically in a specific housing court and rules are often stricter and have a lot of local subtlety. For example sometimes you can only pay a portion of what you owe to dismiss an eviction proceeding, and so on.
That doesn't necessarily change the amount of money actually owed though, which can still be recovered the normal way with a regular old lawsuit for breach of contract, unjust enrichment, and so on.
> now it feels like the government can basically commandeer your property at will
Owning property is basically a contract with a whole different kind of "governments" saying they will progressively use their soldiers to defend your property if it gets invaded by different kind of actors. So yeah.
Your friend is not the only one that got to see the harsher side of what the government is during the pandemic. People basically had their jobs made "illegal" from one week to the other because they were "unhealthy", like prostitution basically but yeah now suddenly selling luxury clothes on a mall was also like that.
I think the counter argument is this is used to discourage residential investment properties to the point where you’re either land banking or you sell it because it doesn’t give you the income you want. Hopefully local taxes will discourage the former.
> I see all these calls for "cancel rent", as if housing grows on trees and landlords are all some kind of Ebenezer stereotype, instead of being a lot of small-time folk just trying to get by.
So letting property should just be risk-free profit? Being a landlord is a business and businesses fail all the time.
I think the idea is that landlords did accept a risk that if tenants did not pay they would have the legal remedy to evict them.
It was the government that took away their legal remedy without any due process.
Comparing it to any other business, imagine the government coming in and saying you will continue having to operate your business but your customers no longer have to pay.
Businesses fail all the time, even though other kinds of businesses aren't required to keep providing products/services to people who stopped paying for them.
This is reductive and the reality is the system typically fights hard against socialistic policy so we end up with half solutions like a moratorium instead of the government paying the rents on behalf of the tenants. Now you claim "Socialism. Bad." because of it.
Can you be more specific about what you mean by this? There's something like 1 to 4 socialists in congress, which makes them a powerless fringe minority, so it's confusing that you would talk about them as if they were in charge.
I think a good (or at least simple) solution for this problem is to increase taxes on non-primary residences, as a simple case the tax rate could be:
20% + 10%/extra house
So if you own 9 houses you're paying 100% in taxes, making it untenable to be a large-scale landlord. This should cause a bunch of housing to go on the market with people wanting to avoid that tax risk, also driving housing costs down
Surely if this guy is a known grifter it would've come up in a background check or credit check when he applied for the apartment. There is always a large risk that a tenant fails to pay rent, even before covid. If anything, your family member benefitted from the government offering rental assistance. It sounds like he wasn't fully aware of those risks when he decided to become a landlord. Being a landlord has never been a risk-free investment, but landlords love to pretend they are the victim anytime that risk doesn't pay off.
> Being a landlord has never been a risk-free investment
Never in a million years would any reasonable person think the government would come in and say "I don't care if they don't pay you for 18 months, you have to keep a roof over their head and play landlord to a complete deadbeat".
That is a contingency so far out of the norm it is a bit ridiculous to blame business owners for not preparing.
Blaming businesses for "not being prepared" for massive, completely unexpected government overreach is pretty lame.
I have rented in about 15 locations in the last 10 years and have a rental property of my own and I largely agree with everything here, but this particular sentence is fantasy.
> A landlord can maintain a revolving door of low-income tenants, evict those who fall behind on rent, and keep the security deposit.
The idea this is somehow going to be a long term money making strategy is a fantasy. If a tenant pays rent on time and doesn't wreck the place, a landlord isn't kicking them out without a really good reason because there is a huge risk you get a garbage tenant who doesn't pay and wrecks the place, or you fail to get a tenant at all.
Absolutely - total trash statement. Landlords want tenants who a) stay, b) don't damage unit, c) pay rent on time. THAT is a guaranteed money maker. The overhead of flipping a unit in landlord time is high. You've got eviction, cleanout, repair costs, showing costs, lost rent, landlord / management co time etc etc.
In CA you can only keep portion of deposit used for repairs, you can't use it to cover all your other overhead costs on a flip. So you are guaranteed to lose money on the flip relative to renting it.
All the gravy comes when you can keep that tenant, keep unit in good shape with little work.
The big money is going to be to the folks who are successful with actively screening tenants. I know a landlord, basically upmarket, everyone I think kept paying the entire pandemic. Now that is gravy (she refinanced a ton of the properties down to rock bottom rates, got bailout money for prop mgmt staff, and is collecting rents) - that's pure goldmine
I live in CA and it’s very common for landlords to illegally attempt to keep all of the deposit with trumped-up damage charges. I’ve had success with aggressively worded legal threats to fight this behavior, but a lot of people lose their deposits this way. If the landlord is friends with a contractor who can write a receipt, they can get away with a lot.
I thought the same thing. I own 6 rental properties, and there is no way serial eviction is a profitable business model. I want my tenants to stay in the property because tenant turnover is costly. You lose at least a month's rent while the property is on the market. If the tenant is represented by a real estate agent, they get 1/2 month's rent commission. At minimum, you must pay to clean the property, but usually, to keep the property marketable, you must paint or replace carpeting. Then there are the repairs and maintenance that must be done while the property is vacant. If you must go to court to evict, there is usually a months' long delay and the legal costs. And, I can't just wave my hand and keep the security deposit. In California, it can only be used for damage caused by the tenant, and any forfeit must be itemized.
The dirty little secret of high housing costs is illegal immigration. We limit immigration for a reason, and that reason is not to overburden our infrastructure. When you bring in an excess 1 million people, as we did last year, nearly all of them low wage workers, they take up the little amount of low income housing stock available. That drives up costs. There are other factors, of course, but that would be the easiest to remedy.
I think you are mistaking the strategy that works for you with the only viable strategy. The article calls out that this is a strategy that can work in some places, and it clearly can -- if evictions are fast enough and they aren't a large fraction of tenants.
Depends on the property. The article specifically refers to low-income tenants presumably renting low-cost housing. The security deposit is 2mo rent and you don't need to chase them for it.
Probably not too many slumlords on HN, as evidenced by sibling comments.
> Mass eviction, both in and out of pandemic times, is best understood as a symptom of a system out of whack.
I think the shock will be releasing the dam all at once after you've held back all of the water in its entirety for over a year instead of letting it trickle naturally, and giving those people room to find what to do. Now they're all going to be scrambling for the same resources all at once, and in a lot larger numbers, in a time when those things are getting more expensive and rare. I believe this solution is much worse in the long run than what it was trying to prevent. For the renters, the landlords, everybody.
> a system out of whack
The moratorium was outside of the system, artificially created by politicians, imposed on the system. AFAIK, there has never been a moratorium of this kind in US history.
If you ignore that the whole goal of this was to prevent evicting people during a novel virus pandemic that killed over 600,000 Americans, sure, it might be "worse". Something like 20 million people lost their jobs in March/April/May of 2020 - arguing that it would have been "better" for them to lose their houses too is beyond parody.
Edit rather than replying to 5 people saying the same dumb thing:
Sure, some people got assistance, many people even did, but when something like 1/4 of Americans have less than $5k in savings and the government stimulus payments took several months to reach bank accounts (more if you hadn't filed in prior years) -- maybe, just maybe further interventions were important to keep people off the street and out of communal housing?
They lost their jobs but not their income. unemployment benefits and stimulus allowed all my service industry friends to come out ahead. I don’t understand why the strategy was to give people cash to cover their rent and also allow them to not pay it. That is obviously going to lead to a scenario where benefits get spent while rents go unpaid.
> arguing that it would have been "better" for them to lose their houses too is beyond parody.
Homelessness was not the only outcome. Many of those unable to pay rent would have been able to borrow money, sell off assets, receive government assistance, make forbearance agreements with their landlords, or move to lower cost housing. The burden could have been shared among tenants, landlords, lenders, and governments. With the moratoria, however, all of the burden fell on landlords.
Edit: Also unemployment (often expanded beyond normal payment amounts and extended for longer durations) and federal stimulus checks.
> If you ignore that the whole goal of this was to prevent evicting people during a novel virus pandemic that killed over 600,000 Americans, sure, it might be "worse"
And the beauty is absolutely nobody can look at the data and truly say any of these massive government mitigations did a single bit of good at all. They, in my opinion, took something bad (600,000 people dead in the USA) and made it 100x worse.
> I think the shock will be releasing the dam all at once after you've held back all of the water in its entirety for over a year instead of letting it trickle naturally
There was no "trickle naturally".
Unemployment rate February/April 2020: 3.5/14.8%
Now combine this with:
- Higher chance to be crippled by healthcare debt
- 78% of US workers live paycheck to paycheck (2017)
What if we eased evictions back in? Something like this: in August 2021, allow evictions for reasons other than non-payment of rent plus of anyone who's been behind on rent since February 2020. In September 2021, also allow evicting anyone who's been behind on rent since May 2020. In October 2021, since August 2020. Continue moving the cutoff by 3 months per month until it catches back up to real time in May 2022, then all evictions are allowed again.
I resent that I have been diligently paying my rent from savings this whole time, even since I lost my job in December, while so many people are avoiding that by gaming the system. Not to speak of anyone who legitimately needs rent assistance or the moratorium.
This will have deep long lasting repercussions. Do you think anyone is going to rent out their house anymore after getting burned like this? This will further reduce the rental supply in the long term, driving rents up even more as the few remaining landlords demand ever higher cap rates.
This is false dichotomy. Investment capital builds and improves all real estate. The real issue are zoning restrictions that limit supply and Fed policy that has flooded the system with few places to invest.
It’s reasonable to use investment capital to produce housing, then have people live in the housing and pay rent to provide returns to the investor. That’s a good way for society to enable people who can’t build a home to still get to live in a home. This shouldn’t provide permanent unbounded returns, because housing doesn’t last forever, needs to be maintained, and other investors can build more housing to compete away excess returns.
The problem is investment returns for land, especially in combination with density restrictions. That’s where the housing affordability problem comes in.
A minimum unit of housing per person is a necessity for society. It is also incredibly difficult to scale since we can't just build more land in the places it is needed.
We expect the value of our investments to rise at a rate faster than inflation.
If housing is a good investment eventually it becomes unaffordable for the minimum unit per person.
We are so used to the concept that housing always goes up that it is hard to grasp, so a good thought exercise is to flip housing with food.
Imagine if the price of food went up more than inflation year after year, and cities restricted how much of it could be grown and sold. We would have people that buy and hold food so they can sell it to hungry people for even more next year. Some people would starve because no one is selling anything below a certain price.
North America has built a system around the idea of housing values always going up. But eventually you hit a limit where a necessity of life becomes completely unaffordable (compounding returns being what they are). So if you believe that housing is an investment in aggregate (that is that all housing lumped together will rise faster than inflation), then the inevitable conclusion is that housing becomes unaffordable for more and more people higher and higher up the income chain (Ahem, bay area).
Every other good that we consume with tends to go down in price (indexed to inflation especially when value is considered). Food, clothing, electronics, cars are all much better deals than they were 50 years ago. Housing is the opposite
Some anecdata: my parents own a ten unit apartment building in a small (fairly poor) town. In the last 18 months, only one of them was creating issues worthy of eviction (and it was unrelated to non-payment - most tenants are on some form of SSI). So they took the moratorium with a bit of a shrug.
What the parents did is the dirty little secret for low-income tenants. Rent to people on Section 8 or on government assistance. Govs don't miss those payments, and tenants tend to be more stable in fear of losing the program. The problem is that you have to dealing with government agencies.
I did not renew leases and instead sold my properties. Seemed like a good time for selling and mass evictions is not something I wanted to be a part of as a mom-and-pop landlord.
Readit News
I have a family member who had the misfortune to rent out a house he previously lived in (he was moving and due to some issues in the neighborhood wanted to rent his old house out for a year before selling) in Feb of 2020. I think his renter paid one month of rent, and then nothing after that. And I looked the guy up, I have sympathy for people who are really on hard times or who lost jobs but this dude is a grifter who is just taking advantage of the situation.
So he's lived there coming on 18 months paying absolutely nothing. My relative was fortunate enough to get a good dose of rental assistance (as this article said, the process was extremely chaotic), but I guarantee he will never be a landlord again. The risk/rewards of a tenant/landlord relationship used to feel well known, but now it feels like the government can basically commandeer your property at will.
So this means you are just going to be left with large corporate landlords who are diversified enough that they can take the risk. And what makes me so angry about this is that, as someone who is generally on the "left" side of the political spectrum, I see all these calls for "cancel rent", as if housing grows on trees and landlords are all some kind of Ebenezer stereotype, instead of being a lot of small-time folk just trying to get by.
This is one of the scariest outcomes of the eviction moratorium. It is basically solidified the fact that you own nothing and the government can take and do with "your" property as it pleases when it pleases.
>you are just going to be left with large corporate landlords who are diversified enough that they can take the risk.
Again, so very true. Why do people think that big corporate landlords are going to be better than the small mom and pops they killed off? Soon everyone who rents will be paying to large kafkaesque monolith who makes you wait on the phone for 5 hours every time you have a problem.
Well, but it's property you've rented out to someone else. IMO, once you've done that, it doesn't truly belong to just you, even if the deed is in your name. Someone else has set up their life in your space—and that's why most localities have laws about when you can evict someone and the process you have to go through.
I understand it feels more salient now, but the government basically always could.
They will take it over late tax payments amounting to a tiny fraction of the value.
They will take it to sell it to developers, who may not ever build anything there.
Cops will hound you until you leave if you meet some pre-crime criteria.
Or take it outright, if you rent to someone who cultivates illegal vegetation.
Or destroy it, chasing someone who might not even be in it, and you will not be reimbursed for this sort of 'taking'.
I get that the eviction thing seems new, and the goal is actually somewhat novel. But 'property rights' have never been as strong as a lot of people think.
(All of those things have happened fairly recently. I'm not going to spend the time finding a pile of links nearly everyone is just going to skip over.)
Sure if the person has no assets at all or declares bankruptcy then that won't help. But in that case he's in the category of people that don't have any money.
I think a lot of people are unaware that there is a distinction between an eviction proceeding, which is a proceeding seeking the equitable remedy of dispossessing someone from a property, and a proceeding for damages, where you try to recover the money they should have paid you.
Eviction proceedings are typically in a specific housing court and rules are often stricter and have a lot of local subtlety. For example sometimes you can only pay a portion of what you owe to dismiss an eviction proceeding, and so on.
That doesn't necessarily change the amount of money actually owed though, which can still be recovered the normal way with a regular old lawsuit for breach of contract, unjust enrichment, and so on.
If they were prevented from working or lost their jobs due to the Government lockdowns it only seems fair the Government pays their rent.
Owning property is basically a contract with a whole different kind of "governments" saying they will progressively use their soldiers to defend your property if it gets invaded by different kind of actors. So yeah.
Your friend is not the only one that got to see the harsher side of what the government is during the pandemic. People basically had their jobs made "illegal" from one week to the other because they were "unhealthy", like prostitution basically but yeah now suddenly selling luxury clothes on a mall was also like that.
So letting property should just be risk-free profit? Being a landlord is a business and businesses fail all the time.
It was the government that took away their legal remedy without any due process.
Comparing it to any other business, imagine the government coming in and saying you will continue having to operate your business but your customers no longer have to pay.
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20% + 10%/extra house
So if you own 9 houses you're paying 100% in taxes, making it untenable to be a large-scale landlord. This should cause a bunch of housing to go on the market with people wanting to avoid that tax risk, also driving housing costs down
Never in a million years would any reasonable person think the government would come in and say "I don't care if they don't pay you for 18 months, you have to keep a roof over their head and play landlord to a complete deadbeat".
That is a contingency so far out of the norm it is a bit ridiculous to blame business owners for not preparing.
Blaming businesses for "not being prepared" for massive, completely unexpected government overreach is pretty lame.
> A landlord can maintain a revolving door of low-income tenants, evict those who fall behind on rent, and keep the security deposit.
The idea this is somehow going to be a long term money making strategy is a fantasy. If a tenant pays rent on time and doesn't wreck the place, a landlord isn't kicking them out without a really good reason because there is a huge risk you get a garbage tenant who doesn't pay and wrecks the place, or you fail to get a tenant at all.
In CA you can only keep portion of deposit used for repairs, you can't use it to cover all your other overhead costs on a flip. So you are guaranteed to lose money on the flip relative to renting it.
All the gravy comes when you can keep that tenant, keep unit in good shape with little work.
The big money is going to be to the folks who are successful with actively screening tenants. I know a landlord, basically upmarket, everyone I think kept paying the entire pandemic. Now that is gravy (she refinanced a ton of the properties down to rock bottom rates, got bailout money for prop mgmt staff, and is collecting rents) - that's pure goldmine
or antisocial.
The dirty little secret of high housing costs is illegal immigration. We limit immigration for a reason, and that reason is not to overburden our infrastructure. When you bring in an excess 1 million people, as we did last year, nearly all of them low wage workers, they take up the little amount of low income housing stock available. That drives up costs. There are other factors, of course, but that would be the easiest to remedy.
Probably not too many slumlords on HN, as evidenced by sibling comments.
I think the shock will be releasing the dam all at once after you've held back all of the water in its entirety for over a year instead of letting it trickle naturally, and giving those people room to find what to do. Now they're all going to be scrambling for the same resources all at once, and in a lot larger numbers, in a time when those things are getting more expensive and rare. I believe this solution is much worse in the long run than what it was trying to prevent. For the renters, the landlords, everybody.
> a system out of whack
The moratorium was outside of the system, artificially created by politicians, imposed on the system. AFAIK, there has never been a moratorium of this kind in US history.
Edit rather than replying to 5 people saying the same dumb thing:
Sure, some people got assistance, many people even did, but when something like 1/4 of Americans have less than $5k in savings and the government stimulus payments took several months to reach bank accounts (more if you hadn't filed in prior years) -- maybe, just maybe further interventions were important to keep people off the street and out of communal housing?
Homelessness was not the only outcome. Many of those unable to pay rent would have been able to borrow money, sell off assets, receive government assistance, make forbearance agreements with their landlords, or move to lower cost housing. The burden could have been shared among tenants, landlords, lenders, and governments. With the moratoria, however, all of the burden fell on landlords.
Edit: Also unemployment (often expanded beyond normal payment amounts and extended for longer durations) and federal stimulus checks.
And the beauty is absolutely nobody can look at the data and truly say any of these massive government mitigations did a single bit of good at all. They, in my opinion, took something bad (600,000 people dead in the USA) and made it 100x worse.
There was no "trickle naturally".
Unemployment rate February/April 2020: 3.5/14.8%
Now combine this with:
- Higher chance to be crippled by healthcare debt
- 78% of US workers live paycheck to paycheck (2017)
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It cannot be both.
Unfortunately, the engine driving this thing (the whole country) is real estate as an investment.
The problem is investment returns for land, especially in combination with density restrictions. That’s where the housing affordability problem comes in.
I see this mentioned often, as if it's supposed to be obvious, but I don't really get it.
Care to explain?
We expect the value of our investments to rise at a rate faster than inflation.
If housing is a good investment eventually it becomes unaffordable for the minimum unit per person.
We are so used to the concept that housing always goes up that it is hard to grasp, so a good thought exercise is to flip housing with food.
Imagine if the price of food went up more than inflation year after year, and cities restricted how much of it could be grown and sold. We would have people that buy and hold food so they can sell it to hungry people for even more next year. Some people would starve because no one is selling anything below a certain price.
North America has built a system around the idea of housing values always going up. But eventually you hit a limit where a necessity of life becomes completely unaffordable (compounding returns being what they are). So if you believe that housing is an investment in aggregate (that is that all housing lumped together will rise faster than inflation), then the inevitable conclusion is that housing becomes unaffordable for more and more people higher and higher up the income chain (Ahem, bay area).
Every other good that we consume with tends to go down in price (indexed to inflation especially when value is considered). Food, clothing, electronics, cars are all much better deals than they were 50 years ago. Housing is the opposite
Uh, of course it can.