There has been a further moratorium on evictions from the CDC. I understand the reasons, and I don’t in any way advocate for people being homeless. But I wonder if everyone has thought of the longer view on that moratorium. Eventually renters are going to have to pay the rent or leave their housing. If people are out of work and way behind on their rent payments, there is little chance that they will be able to make some sort of balloon payment at some point in the future. Let’s face it, if it is a challenge to keep food on the table right now, there is not going to magically be a moment when thousands of dollars (or more) appear out of thin air to pay the back rent. That means at some point there will be (likely mass amounts) of evictions and people struggling to find a place to live.
On the flip side of that equation, the landlords are not collecting rents right now. Most landlords, even the ones that own whole apartment complexes, are using the monthly rents to pay the note on the dwelling. If there are no rents coming in, then the landlords are not going to be able to continue for long on making mortgage payments. That means that there is likely to be massive foreclosures coming in the near term, say the next 12 months or so. I understand that not everyone can pile up a huge savings account to cover things like this, but part of the problem is buying everything over time. Some folks are in such a hurry to buy rentals that they mortgage themselves to the hilt to buy an “investment property.” Soon we will see what a house of cards that really is. When a person counts on rents to make a mortgage payment, and the rents disappear, how does that person make the mortgage payment? It is a house of cards, and there is a hurricane coming our way soon.
I don’t enjoy making a dire prediction, but I see dire consequences coming our way. There is going to be a flood of evictions, foreclosures, and likely homelessness over the next year or so. I do hope I am wrong, but the numbers just don’t lie. There are fewer jobs now than there were, despite jobs added numbers (see here). Small businesses are closing at an alarming rate (example here). People who were behind on rent/bills before the pandemic started are in even deeper holes now. As a country (the US), we spend way too much time trying to get ahead by using someone else’s money (borrow, borrow, borrow). It’s going to bite us in the ass. I sincerely hope I am wrong. Only time will tell.