Real Estate

The ‘Looming Eviction Crisis’ Is Overblown. Here’s Why

It’s become a bit of a routine now that the federal evictions moratorium will near its expiration and then be renewed at the last minute. This time, the renewal was done after it expired when the Centers for Disease Control and Prevention (CDC) stepped in to ban most evictions until Oct. 3.

Putting aside questions regarding the legality of this order, its justification is built on a false premise — namely, that there is a looming mass of evictions that will put millions out on the streets and sink the U.S. economy back into a deep recession.

Questionable surveys

It should first be noted that the warnings about an “eviction tsunami” or “apocalypse” have been going on since the beginning of the pandemic. On June 10 of 2020, CNBC ran the headline, “A housing ‘apocalypse’ is coming as coronavirus protections across the country expire”.

Then, a year later, on June 11, 2021 it ran, “A massive wave of evictions could be coming. Who’s at risk?” And there were many, many more headlines just like those.

Of course, it’s true that during much of that time, there has been a federal evictions moratorium, and there were several state moratoriums too, but not for all of the pandemic. Furthermore, the federal moratorium has not been a complete moratorium.

For example, it only applied to those making under $99,000 a year ($198,000 jointly), and tenants must “have used their best efforts to obtain government assistance for housing,” among other qualifications. There have still been some evictions during the moratorium.

The fact this looming “eviction crisis” seems to go on forever despite the unemployment rate being back below 6 percent hints that the scale of this issue is overstated.

But the real problem with the evidence for an “eviction crisis” comes with the wording of the surveys used. For example, in June of 2020, the Aspen Institute said that “between 19 million and 23 million are at risk of eviction.” And this July, the Aspen Institute wrote, “15 Million People at Risk of Eviction.”

The big question, of course, is what exactly does being “at risk” of eviction mean? Evictions filings have most certainly not been made on that many people.

Unfortunately, something like half of Americans live “paycheck to paycheck,” and anyone in such a fragile financial position could be thought of as “at risk” of eviction. Wordings such as “at risk of” or “facing” eviction are very slippery and likely to overstate the problem.

The large majority of tenants are paying

While many Americans live paycheck to paycheck, the large majority are making their rental and mortgage payments. This has been our experience with our rentals as well as the other investors and property managers I have spoken with. But it is also reflected in the data.

The National Multifamily Housing Council does a monthly survey of apartment owners, covering just shy of 12 million units, and found that 95.6 percent of their tenants paid rent in June of 2021. This is down slightly from 95.9 percent in June of 2020, but it’s still quite high.

Apartment List did a similar survey and found a similar result in late 2020. And a report from Realty Income found that rent collection “had stabilized” for commercial tenants as of March, 2021.

This is not to say that the economy is just fine and that there’s no problem. Indeed, evictions may be necessary, but they are not a good or inconsequential thing. They are something everyone wants to avoid, and even one eviction is a hardship. That being said, there is no looming crisis. And this becomes much more clear when looking at the number of eviction filings.

Eviction filings are not up

The Eviction Labs at Princeton University is a pro-tenant department that monitors evictions across the country. Right now, it is tracking data in six states: Connecticut, Delaware, Indiana, Minnesota, Missouri and New Mexico.

Looking at the data from those six states, there is no evidence of any sort of major uptick in filings. After all, landlords can file for eviction despite the moratorium (it just won’t be carried out in most cases). 

Minnesota and Connecticut put in place statewide eviction moratoriums that have stayed in place alongside the federal ban. When the statewide moratoriums were enacted, the number of eviction filings fell dramatically. They then rose in both states before settling in at numbers below the pre-COVID levels.

Missouri never had a state moratorium. The number of filings rose before flattening out after the federal moratorium was enacted. New Mexico also had no state moratorium. The number of eviction filings has been, more or less, flat the whole time.

Delaware and Indiana had state moratoriums that ended just before the federal moratorium was put in place. In both states, eviction filings went up after the state moratorium ended and then leveled off before the federal moratorium was put in place. They have stayed flat ever since.

There is no reason for landlords not to file for eviction right now as the first ones filed will be the first served whenever the moratorium ends. The data from these six states shows no sign of an incoming “eviction tsunami.”

There are options other than eviction

Not every eviction filing leads to an eviction. Sometimes, the tenant can pay the balance off, and many times, the landlord and tenant agree for the tenant to simply move out. This is often done for a small payment in exchange for the unit to be left “swept clean” in a process colloquially referred to as “cash for keys.

In one analysis from before the pandemic, for example, Roger Valdez found that in Seattle, evictions filings had been made on “about .7 percent of the total rental units in the city. How many tenants were actually removed? The answer is about 600, or about .3 percent.”

In other words, less than half of eviction filings lead to an eviction. I suspect it could be even less after the moratorium ends.

Indeed, in our own experience, we have had several nonpaying tenants, and most have moved out even despite the moratorium. After all, the unemployment rate is down below 6 percent, and while many tenants who are behind on their rent may not be able to make up the entire balance they owe, many are capable of starting over again and making payments at a new place.

Furthermore, there are still resources available for tenants in need. In my home state of Missouri, for example, there is a $324 million fund to help tenants pay their rent. Nationwide, there are about $45 billion in funds available.

Finally, the federal government has also shown no hesitancy to spend money during the pandemic. If evictions do begin to get out of control, it would be shocking if they did not green light more funding.

The bottom line?

No one wants an eviction. Property owners don’t want to incur the expense of eviction and have a unit producing no income, and tenants obviously don’t want to have to move out (sometimes without an obvious place to go) and get an eviction on their record.

But just because evictions are ugly, that doesn’t change the facts. Fortunately, while there may be a lot of talk of an “eviction tsunami” or “eviction apocalypse” whenever the federal moratorium ends, the data does not support that fear.

Andrew Syrios is a real estate investor and partner in Stewardship Investments and an real estate agent for eXp Realty in the Kansas City metro area. Connect with him on InstagramFacebook or Twitter

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