Since March, eviction moratoriums of varying degrees have been implemented across the country in well-intentioned, but short-sighted attempts to shield renters from the economic fallout of the COVID-19 pandemic. While on the surface eviction moratoriums may seem like attractive policy tools to help renters facing prolonged unemployment or reduced income, they actually can cause more harm than good.
Eviction moratoriums do nothing to help renters pay their rent or deal with the financial distress households are facing. At best, they merely kick the can down the road and make it increasingly difficult for housing providers to meet their financial obligations and continue to provide shelter to those who need it most. Of particularly concern, most housing providers in the U.S. are small businesses or individuals not equipped to absorb months of unpaid rent. The federal government’s recent eviction moratorium, directed by the Centers for Disease Control (CDC), offers no accompanying rental assistance and risks saddling renters with untenable levels of debt. Renter households already owe unsustainable amounts of back rent and that figure can only be expected to grow by degrees of magnitude the longer the eviction moratorium drags on.
Very soon, this health and economic crisis could become a housing and financial crisis. Saddled with months of back-rent and accumulating credit card debt, renters throughout the U.S. could be forced to turn to bankruptcy at a scale we have not seen in decades. The ensuing defaults would have rippling effects throughout our entire economy, and our financial system could be facing another 2008-like downturn. It’s hard to predict how severe this financial failure may be, but everything from 401(k)s to college funds may be in jeopardy. This financial downturn also runs the risk of bankrupting small housing providers. Without support, the units they maintain could be removed from the market – making the country’s housing shortage even more severe.
Thanks in large part to assistance delivered through CARES Act provisions, apartment renters were largely able to stay current on rent payments during the onset of the pandemic. But stimulus payments have dried up and enhanced unemployment benefits have expired, so it is little surprise that the number of households unable to meet their housing obligations has begun to rise. Congress already has a playbook to help renters stay current on their rental payments: direct assistance to those in need. Now is the time for Washington to work together to support the millions of Americans who call an apartment home by enacting meaningful rental assistance.
While housing is local, the financial challenges facing renters and the apartment industry are of a national magnitude. Eviction policies are best left to state and local officials who better know the intricacies of their housing markets and can tailor protections to the varied and unique eviction laws and judicial processes across jurisdictions. The CDC’s blanket eviction moratorium fails to take this into consideration and threatens to make a bad situation worse by luring renters into a debt trap few will be able to climb out of unassisted. However, what is clear is that the federal government has a critical role to play by providing rental assistance to those who need it and prevent the eviction process from even beginning. The most effective way to avert a housing crisis is to keep renters current. To do so will require bipartisan agreement on a stimulus package that includes meaningful rental assistance.