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Eviction Moratorium Extension Causes Angst

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Metro Detroit landlords continue to wrestle with the eviction moratorium extension. Some have drained their savings and maxed out credit cards to cover costs on their rental properties. The eviction moratorium had recently ended, only to be extended again until October 3. Tenants who face eviction often lose everything when their belongings are disposed of. More than 18,000 applicants have been approved for more than $117 million in rent relief, with thousands more awaiting approval of their application. $400 million still needs to be distributed. Although the extension was intended for communities that had substantial Covid 19 spread, Wayne County now qualifies after entering the substantial transmission category on Wednesday afternoon.

Eviction Ban Reversal Upsets Lobbyists

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Housing lobbyists are upset about President Biden’s decision to revive the eviction ban. The President’s unexpected move to reinstate the federal eviction moratorium is a political loss for the National Association of Realtors and its industry allies who say they were excluded from discussions on the ban with the White House. Despite millions of dollars in contributions, industry trade groups felt the sting of betrayal from progressive lawmakers. The eviction ban fight is making its way through the courts.

 

Eviction Moratorium Continues Through July

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The pandemic-inspired nationwide ban on evictions is hanging around for a while longer. The Supreme Court rejected pleas by landlords to end the moratorium with a 5-4 vote to keep the pan in place. The ban is due to expire at the end of July and another extension isn’t expected. In addition, the Treasury Department issued guidance encouraging a streamline distribution of the near $47 billion available for emergency rental assistance. The government is attempting to blunt the impact of the end of the eviction moratorium.

 

Millions Face Eviction & Uncertainty

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As states challenge the federal moratorium on evictions, families across the U.S. don’t know if they’re going to have a place stay.  An avalanche of evictions could soon become a reality as renters owe $53 billion to landlords. The Texas Supreme Court lifted the moratorium on evictions on March 31. As a result, the Dallas-Fort Worth area has the third-most eviction filings in the country. The moratorium is scheduled to be lifted on June 30. According to the Aspen Institute, 40 million Americans are at risk of losing their homes.

 

Virtual Evictions Threaten Constitutional Rights

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Across the country, eviction hearings have moved to the computer because public officials don’t want to risk exposure to sick tenants arriving for court appointments.  Lawyers have seen virtual eviction hearings that take as little as 30 seconds. Tenants often don’t have access to computers and have to dial into the hearings with their phones. Many courts only accept documentation online, and tenants who try to submit their records in-person are turned away. Many argue that tenants’ due process rights are violated by the technological and financial barriers of the eviction proceedings.

Texas Courts Begin to Allow Evictions

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Texas courts are indicating that they will not enforce a federal order that would stop evictions during the coronavirus pandemic. While Congress has approved billions of dollars to help people pay their rent to avoid eviction, many of those tenants have yet to receive any of that money. The Texas Supreme Court did not extend its emergency order, and the Texas Justice Court Training Center issued guidance essentially telling judges it’s not their job to enforce the CDC’s order. Legal aid attorneys are gravely concerned about the tens of thousands (and possibly more) who will be left homeless.

The CDC Takes Steps to Extend the Eviction Moratorium

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The CDC is poised to extend and possibly improve the moratorium on evictions. The eviction moratorium will expire in less than two weeks. The expiration could potentially put over 1 million people out of their homes.  With nearly 10 million Americans behind on their rent, Congress approved over $50 billion for rental assistance. However, the state and local channels have just now opened up the application process. The vast majority of people who need the assistance will not receive it in time should the eviction moratorium be allowed to expire in March.

Lawyer – No Light at the End of the Pandemic Tunnel for Property Owners

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The future of real estate continues to be in a flux. At a federal level, GSEs have continued to extend foreclosure and eviction moratoriums through June 30, 2021. The Center for Disease Control issued its own eviction moratorium in September 2020, and the Biden administration has extended it through March 31, 2021. In Michigan, the pandemic’s eviction moratoriums have expired, although the Michigan Supreme Court has recognized the CDC Order. No formal foreclosure moratoriums were ever instituted in Michigan, but social distancing requirements have halted the proceedings that are held in courthouses which have been closed to the public during the pandemic.

Thousands of St. Louis Evictions Promise a Wave of Homelessness

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Thousands face eviction in St. Louis, Missouri. The backlog of eviction suits threatens to leave many homeless, especially low-income tenants. An eviction defense program and hotline that was set up in August 2020 has received 60% more calls than normal, and many of those calls concern illegal lockouts. The backlog of eviction suits is concerning, with the fear being that all of these tenants may be put out all at once when the eviction moratorium ends.

Weekly Brief – January 11, 2021

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I want to highlight a few topics that I believe will dominate the Michigan real estate landscape at a macro level in 2021.

First, mortgage foreclosures will begin to impact the residential market later this year. Although there is the potential for further federal or state moratoria, eventually we will be unable to kick the can further down the road. These foreclosures will begin to place downward pressure on sales prices at the end of 2021 or early 2022, as the foreclosed properties will begin to be marketed for resale.

Second, the impact of COVID-19 on commercial properties will begin to be felt in 2021 as well.

Although it appears the industrial class is weathering the storm quite well, the same cannot be said for retail and office properties.

For retail properties, in addition to the impact of “stay home” orders, you have the continuing trend of online shopping, which only accelerated due to COVID-19. Paradoxically, the decline of the retail sector has contributed to the stability of the industrial sector, as logistics and warehouse uses that support online retailers have thrived during the pandemic.

Major retailers often file for bankruptcy protection in January, after the cold realities of a failed holiday season hit home. This year, I would expect that major retailers, as well as “mom and pop” stores will have to fact reality in early 2021. The “sit-down” restaurant sector will likely also be impacted.

For the office sector, it remains to be seen is whether the impact will be long-lasting. If companies permanently shift work to a remote, or work-from-home, setting, the impact on the office sector could be significant. However, if employers move back to a traditional work setting, 2020 may be a blip on the office sector radar.

Finally, the lifting of eviction moratoria will impact the residential market. Evictions could have a net positive impact on the investor-owned market, as non-paying tenants are shown the literal, and proverbial, door. Or it could merely signal that rental rates will be forced down, impacting investors and overall residential market pricing.

If you would like to track articles on foreclosure and evictions, those articles are specifically tracked on this page of the Michigan Real Estate News website.