Exterior view of multifamily residential building; Menlo Park, San Francisco bay area, California
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As U.S. Senate Majority Leader Mitch McConnell readies to unveil today the Senate proposal for the next coronavirus aid package, assembled together with the White House, the renewal of key policies credited with keeping renters and homeowners afloat during the pandemic remains uncertain.
Many discussions on Capitol Hill have focused on the merits of extending the federal enhanced unemployment benefits of $600 a week, which the CARES Act mandated back in March. The extra money for Americans who have lost their jobs due to Covid-19 supplements state unemployment insurance, helping laid-off or furloughed workers cover daily expenses, including their monthly rent and mortgage.
According to the National Multifamily Housing Council’s rent tracker, throughout the pandemic, monthly rent payments have remained stable and largely on par with last year’s levels.
“One of the reasons that we’ve seen strong rent collection numbers is because those extra benefits allowed people to continue to pay their bills and specifically their rent,” says Cindy Vosper Chetti, senior vice president for government affairs with NMHC.
The federal $600-a-week benefit, however, ends this month.
The HEROES Act, which the U.S. House adopted in May, extends the funds until next year. Republicans oppose this, arguing that, as the economy reopens, the extra money would erode employers’ ability to summon staff back to work, especially those whose total unemployment payments surpass their wages. The latter scenario applies to two-thirds of eligible unemployed Americans, according to a paper by the University of Chicago’s Becker Friedman Institute for Economics.
Yet, with the resurgence of the coronavirus, it appears that another round of furloughs might already be underway. This week’s unemployment claims inched up to 1.4 million, posting the first increase since the end of March.
While four months ago, most of the Covid-19 economic impact burdened low-income Americans in hospitality and retail, the prolonged downturn has now snaked its way to white-collar industries. LinkedIn and Nike NKE are the latest companies to begin slashing their workforce.
Even if they are more likely to have savings, for Americans who are now losing their high-paying jobs, the $600 extra a week in unemployment may not even be enough to meet housing and other expenses.
Renters in Class A properties, or the most expensive units in a given metro area, are already showing signs of distress. Some 9% of renters making $100,000 or more have not paid or have deferred their rent last month, according to the latest U.S. Census Pulse Survey. That is more than double the share in early May, when the Census started the survey to measure U.S. households’ response to the coronavirus pandemic.
Proposals for rent relief
Through the HEROES Act, the U.S. House has adopted the allocation of $100 billion in rent relief for low-to-medium income Americans facing Covid-19 adversities. In the Senate, Democratic Ohio Senator Sherrod Brown is sponsoring a similar proposal.
“It makes a lot of sense to ensure that there is a program that would be also specific to rent payments,” says Chetti. “We think that $100 billion is probably in the in the in the right amount.”
Direct rent payment assistance would also support landlords, who need to pay a mortgage, property maintenance as well as staff. Because of that larger housing market benefit, NMHC is pushing for a federal commitment to a rent payment program.
Yet, even though certain CARES Act provisions approach their expiration dates, money through the $2 trillion stimulus package is still being dispersed around the country to help renters and homeowners. In New York, for instance, Governor Andrew Cuomo initiated an emergency rent relief program with CARES Act funding.
About 200 similar state and local programs exist around the country, according to the National Low Income Housing Coalition. But Diane Yentel, president and CEO of NLIHC, said they have “limited funds to meet overwhelming demand.”
Split opinions on eviction bans
Late last week, Senator Kamala Harris (D-CA) introduced a wide-ranging bill, the Rent Emergencies Leave Impacts on Evicted Families (RELIEF) Act, that aims to protect both renters and homeowners. The suggested legislation not only bans evictions and foreclosures, but also prohibits utility shutoffs and rent increases, among other things.
“Housing is a human right, and that’s why we need this comprehensive plan to help keep Americans safe and in their homes throughout the Covid-19 pandemic,” Sen. Harris said in a statement.
Sen. Harris’ bill stops evictions for a full year, after the moratorium implemented through the CARES Act for multifamily properties with government-sponsored mortgages runs out tomorrow. A bill by Sen. Elizabeth Warren (D-Mass) will have the same effect.
“Renters who have lost their job or had their income reduced shouldn’t have to fear losing their homes in the middle of a pandemic,” Sen. Warren said in a statement. “Housing is a human right and an absolute necessity to keep families safe during this crisis, and Congress must step in now to help keep people in their homes.”
The NMHC supported the eviction moratorium in the CARES Act, where it served as a short-term solution to shield tenants from the pandemic as its economic implications were just starting to unfold in late March. The extension of such a ban, though, would fail to achieve the remedy it aims for, says Paula Cino, NMHC’s vice president, construction, development and land use policy.
“Protracted moratoriums are not sustainable,” she says. “They do not address renters’ underlying financial distress. What we really need is help for those who have been impacted by Covid-19 through robust government assistance that really helps renters continue to make their payments.”
Moreover, even if the CARES Act eviction halt expires, Freddie Mae and Fannie Mac have amended their policies to include three more months of multifamily mortgage forbearance for properties with government-backed loans. Landlords, who receive the assistance, cannot displace tenants.
Nonetheless, as local eviction bans run out, housing advocates are warning against widespread displacements, potentially impacting one in five renters, according to the Aspen Institute. Virtual eviction proceedings have already begun in some cities.