Tag Archives: housing

The Vultures Are Circling the Housing Market

New Orleans      Following right behind the crisis that tenants are facing with the eviction situation clouded in different courts and interpretations and no stimulus in the offing, mortgage holders are in a similar mess as the pandemic depression lengthens.  REITs and private equity operators on Wall Street are raising mountains of cash once again to see if they can exploit the crisis as they did in the 2007-2008 Great Recession by flipping foreclosures from homeowners into rental property.

A common line in the farm crisis of the 1970s, when tens of thousands lost their land, was the problem of being “land rich and dirt poor,” where if your grandfather had paid off the land, you might survive, but if not, you were going under.  A headline in the Wall Street Journal on the vultures circling desperate home owners was reminiscent, speaking of the numbers of people who were “home rich and cash poor.”  The story noted a disturbing statistic,

Some 3.5 million home loans—a 7.01% share—were in forbearance as of Sept. 6, according to the Mortgage Bankers Association. Many more borrowers are behind on their payments but not in forbearance programs with their lenders.

The disaster profiteers are making single family homes their war zone whether outside of city center cores or in the suburbs, and they are rolling in money.  The big winners then are now among the nation’s largest landlords.

So far these companies have reported record occupancy, on-time rent collection on par with historical averages and rising rents. Shares of … Invitation Homes Inc. and American Homes 4 Rent, are up 79% and 59%, respectively, since stocks bottomed….

The vultures may not be as large outside of the suburbs, but they are as ravenous.  An article in Shelterforce referencing a recent report on all-cash purchases in New York City made this critical and disturbing observation,

Because COVID-19 has an outsized impact on lower-income Black and Latino families, it will intensify the disadvantage these families have in the face of cash purchasers who use their resources to pick up single-family homes, co-ops, and condos,” reads the report. It could also result in rising prices and fewer affordable homes available for sale overall, a potential increase in the number of distressed neighborhoods anchored by fewer local landlords or homeowners, and a growing concentration of housing in a small number of for-profit hands.

Shelterforce notes that some community developers in some cities are better situated to protect some of this housing as affordable and to modify some of the properties they acquire, but if the impact of this depression is anywhere near that of 2007-2008, it will be a drop in the ocean in most of the country.

Once again, we have to fear that without a huge federal and state response, this isn’t going to end well for millions of families.


CDC’s Eviction Ban, Please and Maybe

New Orleans     I didn’t want to be right on this, but from any reading of the Center for Disease Control’s federal eviction ban, it was clear that it was going to be a hot mess when it came to implementation.  At one level, the order was full of a Swiss cheese of holes left open to subjective interpretation, self-certification, and potentially contentious disagreements.  The CDC offered no straight path for tenants to follow, other than a declaration statement of their income, and no incentive for landlords to do anything but grin and bear it, which they are notoriously unable to do.  With neither the tenants nor the landlords getting any relief, they would all just swim in the unhappy stew until the end of the year.  What could go wrong?  Just about everything it had seemed to me, and, tragically, that seems to be playing out around the country.

A story by Matthew Goldstein in the New York Times makes the case that any dental inspection of the CDC order to determine whether or not it has any teeth or is all gums, pretty much depends on where you live and even what judge you might happen to draw, if you are facing eviction.  Local judges in North Carolina have questioned the constitutionality of the order, and a landlord in Atlanta has filed suit over the question. Some judges believe the order only affects tenants who were covered under the CARES stimulus package.  Some think it only deals with new filings or freezes them in place.  Some don’t seem to care what the order says and ignore it completely.  About the only encouraging word came out of New Hampshire of all places where,

…the state’s Supreme Court has put the onus on the landlords. An order from the court said they must file affidavits stating that they are in compliance with the C.D.C. order before commencing an eviction proceeding and must notify the court if at any point a tenant signs a declaration saying she can’t pay rent because of the pandemic.

Anarchy rules and tenants suffer.  Housing advocates, lawyers, and professors who study this are all unanimous in arguing that there needs to be uniform interpretation and implementation of the order, but without a real mechanism for enforcement, how is that going to happen?  The fines detailed in the order were significant, but I would take a bet that when this is all said and done, less than a handful of landlords will suffer any penalties, and one or none will end up with a $200,000 hit.  This is actually why we elect people to Congress to make real laws and real policies that have the full strength of the federal government, and proof again why the US pandemic response has been so lame and incompetent.

Meanwhile the big boys do what they want, when they want, and how they want.  According to the Private Equity Stakeholder Project,

Corporate landlords, including private equity firms, filed more than 1,500 eviction actions in large counties in Arizona, Georgia, Florida, Tennessee and Texas since the C.D.C. announced it was imposing a moratorium….

What’s a $100 or $200,000 fine to the big whoops, compared to losing rent from tenants, imperiled and out of work?  It’s chickenfeed, and makes a mockery of the order from the CDC providing any hope for most tenants as little more than chicken scratch.