Let’s declare a housing payment holiday.
With coronavirus hammering the national economy, the
conversation has shifted to how the federal government can help
cash-strapped Americans. With business routines upended or closed
by varying levels of virus-related mandates, jobs have been lost
and household incomes have been slashed.
So what’s the best way to give aid? You know, a bailout for
Let me argue for a “vacation” from the biggest household
expense — paying for shelter. Let’s make it legal for folks to
temporarily skip their monthly obligation to the landlord or
lender. Yes, we’ll need a rule or two to stop evictions and
foreclosures, too. Already there’s a foreclosure ban on certain
government-backed mortgages and
California is working on new eviction-prevention rules.
Look, a roof over one’s head is a top human need. A payment
holiday would ease anxieties for somebody soon facing an eviction
or foreclosure notice. Instantly!
Secondly, and maybe as importantly, this would be a way to
provide folks a some financial aid loosely equal to their cost of
Several important people have suggested stimulus plans involving
sending checks of, say, $1,000 to each taxpayer as soon as
possible. I know that would help, but issuing the same-sized check
nationwide means folks in the low-cost regions get more help than
people living in the pricier locales. Such as California.
Let’s ponder how much that difference really is.
Start with homeowners. The typical
California mortgage payment is $1,642 a month, according to
LendingTree. Only Washington D.C. and Hawaii have bigger
payments. Compare that cost to the national monthly average is
$1,069 or the U.S. low of $690 in West Virginia.
Next, let’s think about tenants. A common two-bedroom
apartment in California goes for $1,856 — the highest rent in the
nation, according to Apartment List. That’s far above the
national median of $979 or the U.S. low of $725 in South
I’m sure some folks, especially from out of state, will ask
why should U.S. taxpayers dish out extra cash for California’s
housing shortfalls? Let me ask, as a counter-argument: Where do
you think the biggest chunk of tax revenue comes from?
$234 billion in federal income taxes in 2017, according to a study
by MoneyRates. That’s roughly 1-in-7 of every dollar Uncle
Sam collected. Or look at it this way: It’s more than 90 times
what the IRS collected in Vermont.
Not convinced? California ranks seven-highest for federal taxes
paid per capita ($7,670) and seventh-highest federal income tax
rates at 15.2% of income.
Plus, if California’s economy doesn’t recover don’t bet on
a full national rebound either. The Golden State was a key cog in
the post-Great Recession resurgence. For example, bosses statewide
added 3 million workers during the last eight years, nearly 16% of
all new jobs created nationwide.
So, if California’s stimulus package is bigger than other
states, I’ll argue we did our fair share shoring up the nation
from the last downturn.
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Yes, there are numerous logistical issues with my payment holiday
suggestion. And there are issues with many consumer stimulus ideas,
Reimbursing the landlord or lender for skipped payments is a key
one. Though, turning missed monthly checks into a landlord/lender
tax credit seems like a possibility.
Then there’s the challenge of how to extend somewhat equal
financial relief to those who own their homes mortgage-free. And
perhaps, there should be some caps on this relief so those owning
pricey mansions don’t get too much relief.
Still, who’s up for skipping a mortgage payment or rent
Source: FS – All – Real Estate News 1
Coronavirus stimulus: Let owners miss mortgage payments, tenants skip rent checks