Coronavirus rent crisis: ‘Millions of Americans will have trouble paying rent this month’

An illustration of an apartment building at night, with a streetlamp hanging over a sidewalk filled with bikes.As
paychecks and jobs disappear due to the economic aftershocks of the
coronavirus, a looming question for Americans is, increasingly,
how am I going to pay for the place I live? | Natalie Nelson

The profound economic fallout from efforts to stop the spread
have made paying for housing a matter of national importance

Denver photographer Lucy Beaugard has struggled with tears and
sleepless nights this week.

The 32-year-old works as a freelancer, booking mostly editorial
and commercial work related to the restaurant industry (she’s
shot photos for Curbed sister site Eater). On Wednesday, March 11,
she lost half her business as clients called to cancel work. That
figure rose to 75 percent the next day. By Friday, all her work for
the next two months was gone. March was originally going to be her
busiest month in her five-year career as a photographer; now,
she’s desperately trying to fill her days with running, puzzles,
and Netflix.

“It’ll take a while to rebuild my business,” Beaugard
says. “I’ll be seen as a luxury for a long time.”

Like many workers coping with new economic realities brought on
by the coronavirus, Beaugard worries about how she’ll pay the
bills—especially her share of rent for an apartment she splits
with two other roommates, which comes to $612 a month.

“I probably have enough money to get through March or April,
maybe just enough to pay rent, but few funds to take care of all
the other bills and expenses I need to get by,” she says.
“It’s pretty unnerving. Will I lose everything, or will it blow
over and I can bounce back quickly?”

When trying to convey the extent of the economic shockwave
coming from the novel coronavirus crisis, “unprecedented” comes
off as an understatement. As
paychecks and jobs disappear
, the looming question for
Americans is, how am I going to pay for the place I live?

Rent or mortgage payments are typically the largest monthly
expense for any person or household. With April 1 just a week away,
and a lack of certainty from the government over the length of
mandatory shelter-in-place orders, those payments have become an
issue of national importance as both the federal and local
governments try to figure out how to help people through the
crisis.

Millions laid off. The state unemployment
offices can’t process all of us.
#unemployment

#laidoff

#CancelRent
pic.twitter.com/O6tTG8m0E0

— Jon Terpstra (@JonTerps)
March 23, 2020

Many cities and states have responded quickly with
eviction moratoriums
. That’s a great first step to prevent
people from immediately losing shelter in the midst of a global
pandemic. But if anything, it compounds the question of how we’ll
pay the rent over the next few months.

“April 1 won’t be so bad for tenants, because so many places
have passed moratoriums on evictions,” says Randy Shaw, a housing
activist in San Francisco. “The calamity will be June 1 or July
1. Renters can be evicted in June or July for back rent from April
and May.”

It’s all part of the domino effect that starts with tenants
not having the work, or money, to pay rent. In a typical down real
estate market, the daisy-chain, domino-effect reaction goes as
follows, per real estate lawyer Jeff Friedman: “Apartment renters
lose their jobs or take significant pay cuts and can no longer
afford to pay their rent; owners collect less rent and cannot make
their debt-service payments to their lenders; and lenders are not
collecting enough on the debt service, with their loans now on
distressed real estate assets. Evictions and foreclosures follow,
with distressed assets available to vulture buyers.”

“This isn’t a time to be timid,” says Carol Galante, a
professor at the Terner Center for Housing Innovation at UC
Berkeley as well as a former HUD and FHA official during the

Great Recession
. “Millions of Americans will have trouble
paying rent this month. The more money you spend now, including on
helping people stay in their homes, the less you’ll spend in the
long run in terms of damage to the economy.”

There has been discussion at the federal level of offering
renter relief within the larger stimulus package. The plan put
forward by Senate Republicans, which
failed a procedural vote yesterday
, would have
provided $1,200 check for every adult, based on income levels
,
presumably to help cover housing and other costs (the median
U.S. rent in December 2019 was $1,343
for a two-bedroom
apartment).
Another bill, advanced by Speaker Nancy Pelosi and House
Democrats
, would provide every American with $1,500 and
increase unemployment payments by $600, while also including
additional food assistance and funding to pay some utility bills
for low-income Americans.

For homeowners, the federal government is
instituting a program of mortgage deferment
likely to be
adopted across the industry, which means borrowers will be able to
tack on missed payments at the end of their mortgage.

But backstopping the mortgage market is already part of the
traditional financial policy playbook. This is a long-term crisis,
and will require a solution that looks ahead to the world after the
current economic slowdown, says Galante, perhaps something akin to
a
Universal Basic Income
. Moratoriums are a great, immediate
action, but nowhere near enough.

“I’m a little perplexed that so many people are focused on
rent and eviction moratoriums as the strategy,” she says.
“It’s not a bad strategy, if paired with emergency rental
assistance.
I’m calling for a disaster-like response
. In a hurricane, if
you lose your house, you get housing assistance on a temporary
basis. We need the same thing on a national level right now.”

The policy decisions made now will have an incredible impact on
the economy. Rent payments ripple upward and across multiple
levels, and as Shaw says, “if the renter doesn’t get or can’t
earn money, the landlord doesn’t get money, then the city
doesn’t get money.”

Galante argues that it’s sensible for the federal response
thus far to have prioritized mortgage relief, but that that’s
just one part of what’s required.

“What drove the entire financial crisis in 2008 was people not
being able to pay their mortgages,” she says. “It hurt the
lending institutions, it hurt the individuals, and the
single-family housing market is a huge part of the economy.”

In New York City, where
roughly two-thirds of the population rents
, there are much
stronger calls to go beyond an eviction moratorium, with some
calling to temporarily
cancel rent
. According to Susanna Blankley of the Right to
Counsel NYC Coalition, a citywide tenant organizing group, nobody
should be paying rent during this crisis. The government should
give renters a few months off, and have landlords absorb the cost,
with emergency funding available to help smaller landlords and
nonprofits. Since
the state offered a 90-day mortgage suspension
, she argues,
landlords aren’t in a situation where they have to pay,
either.

“Thirty-nine percent of New Yorkers can’t pay rent if they
lose a month’s worth of work,” says Blankley. “It’s
important people don’t have to worry about being evicted during
this time. But we have to think about what happens when we emerge
from this. We’ll have a surge in evictions and cases flooding the
court.”

The speed at which the crisis is developing, combined with the
anxiety of uncertainty, is leaving renters in a lurch as they weigh
if they should pay rent now, or put money toward more immediate
expenses.

“So many Americans are living paycheck to paycheck, and
we’ll see the consequences of that when April 1 rent payment is
due and so many don’t pay it,” says Justin Hollander, a
professor at Tufts University. He’s
proposed a rapid employment program led by the federal
government
, reminiscent of the Works Progress Administration
programs during the Great Depression, to get money into renters’
hands as quickly as possible. “The Great Depression took years to
come to fruition. The economy slowed down drastically, instead of
grinding to a halt. What’s so sudden and dramatic today is the
large percentage of the workforce that has been put out of work so
quickly.”

Beaugard, the freelance photographer, has mixed feelings about
the
eviction moratorium
, which is currently in place in her home
state of Colorado. Her immediate reaction is that it’s great she
won’t have to face homelessness on top of everything. But without
relief, her only option is to put off paying rent, which amounts to
just another stressor.

“Being self-employed, I don’t like to add extra bills or
burdens, and with a moratorium, there’s no guarantee that later I
won’t be further into debt,” she says.

Thubten Comerford, 54, lives in Vancouver, Washington—a state
that also has an eviction
moratorium
in place—with his partner in a small apartment. He
normally makes a living organizing and producing networking events
for companies in the Portland tech scene, but has no idea when such
events will be permissible again. He’s not sure if he’s going
to pay rent April 1 because he’s not sure how long he’ll be out
of work, and without clear policy and relief forthcoming, he’s
juggling options. If there isn’t relief and he just owes rent
later, when the economy begins to go back to normal, he’s not
sure what he’ll do.

“Is the fabric of society going to fall apart? I have no idea
what’s going to happen,” he says. “Making a choice on
incomplete info is a challenge. I don’t have to decide about rent
for a week or so, but it’s still a challenge.”

It’s not just renters who are seeking relief from the
government. Landlords also need federal assistance, says Jeff
Cronrod, who represents the American Apartment Owners Association
(AAOA), the nation’s largest landlord trade group.

Landlords have been trying a number of solutions to cut expenses
and make their own mortgage payments on April 1, Cronrod says,
including using tenant’s security deposits in lieu of their rent
payment this month. But ultimately, existing moratoriums just delay
rent payments that landlords need to pay their own mortgages and
bills.

Yesterday, the Federal Housing Finance Agency said it would

grant apartment owners mortgage forbearance
if they agree not
to evict tenants, a move that allows apartment owners to
restructure their agreements with mortgage lenders to pay later,
but doesn’t get them off the hook.

“You’re talking about billions of dollars if we forgive a
few months of rent payments,” he says. “Someone has to suck
that up, and I assume that’s the federal government. They’re
the ultimate backstop for all of this. There’s no
alternative.”

As Congress races to figure out a stimulus bill that it can send
to the president, issues of rent and the long-term impact on the
real estate market will be paramount. Berkeley’s Galante says
it’s imperative that any rental aid reflects different costs of
living across the country: a flat amount set too low could make it
hard for renters in high-cost coastal markets to cover all their
bills, for instance.

“It’s also important that we don’t take our eye off the
housing affordability crisis,” she says. “If we don’t factor
that in, we’ll be in another crisis right after this one. We saw
rents really spike after the last crisis.”

Policy that helps guarantee rent and mortgage payments are still
made on time will be instrumental in solving this complex economic
crisis. The exact solution isn’t clear yet, but nearly everyone
agrees that a large-scale government intervention that would have
seemed unimaginable just a few months ago is going to be
necessary.

“We’ve been calling for a city that’s free of evictions
for over a year and people say it’s impossible, and now we’re
living in a city that’s eviction free,” says New York City’s
Blankley. “The demands we’ve been making are now
possible.”

Source: FS – All – Architecture 10
Coronavirus rent crisis: ‘Millions of Americans will have trouble paying rent this month’