It’s a bad time to be a landlord.
Nearly a third of apartment tenants in the U.S. did not pay any of their April rent during the first week of the month. Yahoo Finance reports:
Only 69 percent of tenants paid any of their rent between April 1 and 5, compared with 81 percent in the first week of March and 82 percent in April 2019, according to data from the National Multifamily Housing Council and a group of real-estate data providers.
The non-payment problem is likely to get worse, as renters’ finances are stretched by the wave of unemployment washing across the country. After that will come a wave of evictions–or attempted evictions.
City and state governments are already flexing their muscles. Progressive-controlled states like California and New York have put a moratorium on evictions, meaning landlords will be stuck paying for their tenants’ housing indefinitely with no redress.
The landlords’ expenses won’t diminish–drains like upkeep and property taxes–but their income will fall substantially, with no way to collect or install new tenants who can pay.
The move to landlord-subsidized housing should be unsurprising. Many progressive-controlled cities like Los Angeles, New York, and San Francisco are already struggling with epic homelessness, spending billions of dollars on homelessness ‘solutions’ that do little or nothing, but sound good in the news.
A mass of evictions in a short period would upgrade homelessness to a major catastrophe in these metropolises and make politicians like LA Mayor Eric Garcetti and Governor Gavin Newsom look really bad.
We can’t have that. Both of those guys have great hair and want to run for president.
But just like rent control, when a property can’t be counted on to produce income from tenants, that property becomes less valuable. Apartment properties will plunge in price, as landlords try to divest and exit the business while the exiting is at all decent. No landlord will want to get caught in an epidemic of government-enforced squatting.
Any way you slice it, we’re in for a mess.
And the government’s coarse hand in the housing market will leave a lasting mark. Even if the economy rebounds quickly and matters return to the recent status quo, landlords will have it burned in their memory that, in any disruption, woke governors can and will scream ’emergency!’ and screw landlords over at the drop of a hat. Who wants to invest in such a dicey proposition?
We need to cancel rent until this crisis is over.
— Rep. Ilhan Omar (@Ilhan) April 8, 2020
Yes, this is a real tweet from the Minnesota Mastermind. I didn’t make it up.
It ludicrous to imagine the analogous situation in grocery stores: “The governor has put a moratorium on stores charging for food until this crisis is over.” But that’s more or less what’s happening to landlords right now.
How much you want to bet that a chunk of the people who did not pay their rent this month are counting on the government to intervene? How many of them could have paid their rent, but know that states are going to step in and restrain landlords from exercising control over their property?
Think about it: what kind of sucker pays his rent when he doesn’t have to? Gavin Newsom and Andrew Cuomo have their back, and they know it.
California has been plunging into progressive socialism for a while. The actions of the state in response to the Wuhan virus looks set to accelerate the dive. As Edward Ring writes:
The entire homeless epidemic in California is a result of Democratic policies. It was Democrats who pushed for policies to empty jails and prisons of “nonviolent” offenders, and then it was Democrats who successfully pushed for laws that downgraded property and drug crimes. It was Democrats who successfully pushed for laws that made housing prohibitively expensive to those marginally employed. It was Democrats who built “shelters” at a staggering cost in the middle of stable neighborhoods, putting zero behavioral requirements on those being sheltered (no sobriety requirement, no curfew, no background checks). What did they think was going to happen?
The aftermath of the Wuhan virus will likely speed up the middle-class exodus from California and New York. Who wants to live in an overpriced apartment jammed in between lavish compounds of Silicon Valley zillionaires and movie stars on one side and rec centers full of homeless people on the other?
Will the recreation and convention centers that have been commandeered for the homeless be returned any time soon? Or–what seems more likely–will communities discover that a ‘new normal’ has taken hold after the Wuhan virus has subsided?
“Compassionate socialism dictates that some or most of these centers remain homeless shelters indefinitely. If you want to play basketball in your community center, you are a monster with no feelings.”
Stay tuned …