Pressure on Rising Rents Not Just Landlord Greed

ACORN International Affordability Ideas and Issues

            New Orleans       Listening to ACORN members on their weekly conference calls during the pandemic, one of the hardest balancing acts centered on the rent freeze.  Don’t get me wrong, the rental freeze was a good thing.  People couldn’t work.  There was more month than money.  Tenants were already under pressure across the country due to rising rents.  It had to happen.  Nonetheless, that didn’t mean that there weren’t direct consequences for lower-and-middle-income families that might be renting the other side of a duplex or a New Orleans shotgun double.

There was in fact some relief for landlords, but small ones, like our members, were under almost impossible strain trying to access any support, and if they could apply, timelines were way, way after the bills had come due.  When they had tenants not paying or also waiting for rent relief, they were stuck, too.  On some of these calls, local politicians would be on the spot and trying to answer questions about federal policies from both tenants and some of these homeowners, who were little bitty landlords as well.

The numbers haven’t changed now that the pandemic has been declared semi-over.  Rents have risen, but that’s not all the problem.  In the current semi-recession that is overshadowing the semi-pandemic, there’s no freeze on taxes, insurance, and utilities which are also out of control.

I took a look at the expenses on our building in New Orleans.  The lawyer in the office in the front of the 1st floor is there more than anyone else.  The radio station upstairs is humming 24/7, but otherwise everyone else is in-and-out, spending most of their time in the field and in some cases working remotely.  Utilities have taken this opportunity to increase minimum payments.  November is a special month in the city, no need for heat or air conditioning, but the bill was over $800 and over $500 for water and sewer, which is also ridiculous.  Remember this is our building, so some of this involves commercial minimums, like the $150 light bill we pay for our union hall in Baton Rouge, where no one is working currently.  Many small-owner landlords are paying for water for the other unit, because it’s common to only have one meter.  In other cases, they are renting off-the-books so to speak, so not eligible for anything from anybody. They are caught in the squeeze.  Recently, the water company stopped sending envelopes with the bills.  All of this is essentially because they can.

Insurance next year on our office is $6300 almost with another almost $1300 for flood.  So many insurance companies have gone out of business in Louisiana, remember climate change, that rates are rising for 2023 more than 50% on average.  Two things will happen.  More folks, especially the small homeowners and itty-bitty landlords will be forced to take their chances and go naked on coverage.  Or, one the other hand, they can also gulp hard and pay, but that’s going to also squeeze the rent up.  On our building that means a nut of $2000 per month before paying off any note and hoping nothing will break demanding repairs or fixing.

Many low-and-moderate income folks are only homeowners, especially in a city like New Orleans, because they can rent the other side of the double.  When ACORN was doing housing and loan counseling, the secret sauce was being able to put someone in a double so that the other side was paying the mortgage, making all the numbers work.  I’m not sure that works anymore, and that means, as hard as it is for tenants these days, it may also be increasingly impossible to be a homeowner as well, with taxes, insurance, and utilities rising even faster than rents and incomes.