Has the Eviction Tsunami started on August 1st?

Question

So the CDC eviction memorandum has ended yesterday and the news and social media are talking about a wave of evictions. I have not seen much of that... What are you guys seeing?

We own and operate a portfolio in the Milwaukee area and we had zero rent losses due to Covid since last summer. It was not totally seemless, we had some issues early on in the first lock down. And once unemplyoment hit we did have a few tenants that were strugeling for a while, but we worked it out with them and with the help of some goverment aid, everyone is fully caught up.

I did notice that when we post a house for rent we get a massive amount of interest and a lot of people are telling us their landlord is selling. The good news is that this is some additional inventory, an opportunity for first time home buyers, or also newinvestors.

I am trying to get a sense for how big of an issue this is. I am working on my next market update video and the data analytics firms I subscribe to don't have a lot on the subject, maybe it's just to soon. So what do you guys see?

I would be interested to also see some comments from markets outside the midwest, like San Francisco, Los Angeles, Houston or Boston and New York!

Joe Splitrock · Answer

You won't see any news stories talking about the lack of evictions, because it doesn't fit the narrative.

The news media has been spreading stories with crazy estimates of the number of people facing eviction. Last year a study estimated that 30-40 million tenants could be evicted by the end of 2020. This claim was out of 108 million renter households. That means 28% to 37% of renter households would have been evicted by the end of 2020. Now recent estimates say that 6-7 million people face eviction. That is still 6% of renting households. The issue with any of these numbers is that there is no accurate reporting mechanism to identify "potential evictions", so we get estimates that are agenda driven.

Princeton did a study and estimated during the 16 year period between 2000 and 2016, a total of 61 million evictions took place. That time period includes two recessions, 2001 and the 2008 housing crisis. That average would be 3.8 million per year, but we know it would higher in certain years. The current estimate is double that number. This is unbelievable given $100B+ in rental aid and plummeting unemployment.

It is also important to point out that not all evictions are due to late rent. The actual number is hard to estimate because not all regions track this information. Early in the pandemic my local landlord group was tracking eviction reason and less than half were for lack of payment. People are evicted for lease violations, squatting or overstaying after no-cause notice is given. I estimate 25-50% of evictions are for reasons other than non-payment. There will always be evictions and after 1.5 years of no evictions, you will have over a years worth built up. That means there will be a spike in the next couple months. That is just logical. I still think it will be much lower than estimated.

The other point that is completely missed by the news media is that landlords do not want to evict people. Evictions are costly, increase stress and are a last resort. They act like landlords sit around a bar table working up plans of how to evict people. Like we are evil monsters that want to throw people out on the street. My heart hurts every time I have to evict someone. Evictions are a necessary intervention to snap a tenant out of their downward spiral. It is a consequence for irresponsible behavior, just like foreclosure, bankruptcy, traffic ticket or jail time. There is money available for those who need help and it is their responsibility to get that help. I can't imagine any judge granting eviction on a tenant who demonstrates they are getting assistance to pay rent.

Nathan Gesner · Answer

For anyone paying attention, the media has dramatically exaggerated anything to do with COVID-19 and the eviction moratorium. The big numbers tend to center around large cities and low-income rentals. The majority of the country is doing fine and won't see anything significant. And the (illegal) moratorium was just extended 60 days for those areas so the only thing we'll see an increase of is the number of mom-and-pop Landlords selling off their rental to escape the nonsense.

Jay Hinrichs · Answer

Exactly the media and the sound bites make it sound like Moratorium over day 1 and day 2 on the street..

The Tsunami i predict will be more like a 1 foot high tidal wave we see here on the west coast.. not that a 20 footer that wreaks havoc but when all the sirens go off and everyone heads to high ground and U have to strain to see the 1 foot swell.. that's what I see..  people will work it out..  now I can see some landlords if they were abused by those that could pay and simply would not.. being quite vindictive towards those tenants..  but others i can see doing work outs and other tenants get jobs and start paying.. Right now in our market in Oregon if your able bodied and want to work there are hundreds of employers screaming for employees  paying bonus.. I mean flipping burgers is paying 15 to 17 and hour.

Jerry Holt · Answer

@Marcus Auerbach

It was great working with you as well Marcus! It's still too early to tell but if it means anything we found that for this week the metro Atlanta area eviction filings from individual and mom and pop owners more than doubled from the pre-pandemic average weekly volumes.

Brock Mogensen · Answer

Awesome to hear you got through it all with 100% collections!  One of our properties has about 7 tenants that haven't paid rent in over a year.  We were able to collect some of it back through government aid but the funds have been slow to disperse and spotty.  We are moving swiftly to get those tenants out..who knows how long of a window there will be if they decide to reenact the eviction moratorium.

Dawn Anastasi · Answer

In my area, only 34 evictions were filed Monday. Not thousands, not hundreds, not even one hundred.

Aaron Montague · Answer

We had 1 of 7 apartments late in July this year. They've caught up now. That was weather related instead of Covid related.

We also had an apartment available for August 1st. The property management company indicated there were 14 viewings, 4 interested parties, 3 applications, and 3 good applications. Those are dead on average for our location: south NH on the ME line.

I did get a 10% rent reduction on the place I live right outside of Boston however :)

John Kunick · Answer

Unfortunately, I think the Mom and Pop selling off is by design.  I agree with you that the EM is illegal and I'd say unconstitutional.

James Wilcox · Answer

Man this one didn't age well at all. That window closed really quick.

Jerry Holt · Answer

@Marcus Auerbach

Hey Marcus. I agree that there isn’t much data available out there as of yet. But, in the market areas we work in I can tell you from our perspective we haven’t seen any significant change in the weekly eviction filings for individual and mom and pop owner properties. As an example, in your market of Milwaukie, we have been sourcing eviction filings prior to the moratorium, during the moratorium and after it as well. So far, I haven’t seen any significant change in the weekly volumes. The same holds true in markets such as Indianapolis, Cincinnati, Atlanta, Broward County and other areas as well. If there is an eviction tsunami we certainly aren’t seeing it at this time. But keep in mind that this only applies to individual and mom and pop eviction filings reflecting SFR’s, duplexes, triplexes and quads. My thoughts are that the small landlords are probably working it out with the tenants. As far as for large multifamily there might be a surge in eviction filings, but we aren’t tracking them.

Has the Eviction Tsunami started on August 1st?

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