Yes, obviously. But short-term doesn’t imply an eviction crisis. That only occurs if fully-paying renters don’t pay when the country returns to “normal.”
A Bloomberg Businessweek article says that “About half of the 43 million rental units in the country are owned by small businesses such as Shields’s one-woman enterprise.” They have no reserves. “Her profit last year came to only $24,000, and now she’s behind on $1.2 million in mortgages.” No amount of half-pay can overcome this.
It might. How do you define short term? There are already evictions going ahead in the states that did not place a moratorium on them, and in the states that did place a short-term ban, most of those will expire at the end of June or July, and there are landlords in all of those places who have the paperwork ready.
I agree with the main point of your linked article: the banks and large investors are likely to be the medium- to long-term winners in any eviction and/or mortgage crisis. I’m not completely sure of what the most reasonable solution to all this might be, or if there even is a solution. It certainly does seem that the banks and large investors have an advantage, especially the banks. which can foreclose on property owners while also recognizing that, if the banks themselves can’t meet their obligations, they’ll likely get a bail-out from the government.
That sort of inequity needs to be considered when any government intervention is proposed. In all of the corporate bailouts over the past two decades (post-9/11; the Great Recession; the coronavirus epidemic), there have been, in my opinion, massively insufficient conditions placed on how corporations can use the bailout money, and how they should treat their customers and employees if they want government help.
The last thing banks want on their books is a depreciating asset that is not only outside their physical control, but bleeding money via property taxes. They’re already getting this for free when all the mortgage holders default on their loans and send the keys back in the mail.
So there’s no way you’re going to find a bank going bargain-hunting in the middle of a housing crash. Banks want to collect money from property owners, they don’t want to be property owners.
Property is where the money is at. It is a tangible asset.
Sure it can go down but mostly it goes up.
Besides, the banks will re-possess and auction it off and make some money. The risk goes to others…others who are friendly with banks and would love to get their hands on these assets and are more than happy to hold it for years because, in the end, it pays off.
Foreclosed buildings almost never go up in value. Selling a property at auction brings pennies on the dollar. And that is usually a long, slow process as shown after the 2008 housing crisis.
Pennies on the dollar is more money than the bank would get otherwise. If the bank thought a different route would make more money then they would do that instead.
Those who buy the properties…I honestly do not know how they hang on for so long but they do.
As an example, the Old Post Office in Chicago is a HUGE building that sat empty for over 20 years. Only now is it being renovated and occupied.
It’s very valuable property though. So, why and how it can sit in limbo for so long, presumably costing someone a fortune in taxes and maintenance, is beyond me. But, clearly, they do it.
Foreclosures on residential houses outnumber old historical monuments by about a zillion to one. The two are not comparable.
I’m sorry, all of this is made-up fantasy. Banks do NOT want to be in the landlording business, nor in the flipping business, nor in the business of holding any asset that can’t be put in a safe or transferred over a wire. It’s not a core competency, and the last thing they want is to get a set of keys in the mail from a borrower in default.
Where I live, practically every property that was abandoned in the 2008 recession sat that way for 2-3 years. In that time they sat unmaintained, they were damaged by wind, rain, stripped of copper and metals. They were owned by banks that couldn’t unload them and ultimately were sold for less than construction costs.
As the economy opens up, those people will be going back to work.
Yes, I was on a rent board, and the smart landlords had figured out that losing a good tenant was a bad crap shoot. If the tenant keeps the place clean, doesnt complain all the time, and HAD BEEN good with the rent- raising their rent a bunch due to new market conditions is a bad idea. Because- every once in a awhile you get a really bad tenant, and they usually cost about $10000- lost rent, damages, and legal fees. They can cost more than that, of course.
I would talk to my tenants, and see why they arent paying rent. I mean, they should be getting UC, and in many areas the UC* will net about the same- maybe even more. Are they just not paying rent because they can get away with it? Or are they truly in dire straights? If the latter, I would ask that they pay half or whatever, and then work out a payment schedule afterwards, maybe even excuse part of it.
I dont know anyone who currently is hurting that badly economically. Yes, a couple are on UC*, but their net is either a little less or even more. Several work from home. Several are “essential”. The only guy I know who is hurting is a PT sub teacher- and he lives at home with his parents anyway. So, he just has no disposable income. Annoying, certainly.
That is likely including depreciation. But yes, not a lot of positive cash flow in renting.
The landlords that still have to make monthly payments cant afford a huge decrease.
OTOH, eviction is even more expensive.
It is not a monument. It is an office building. A great big one.
I have little doubt you can find areas in any big city with empty, run-down buildings. This one just happens to be more conspicuous than most.
You’re right.
They will auction them off ASAP.
If they thought there was a way they could make more money then they would do that instead.
One effect is that with high unemployment, more people are likely to qualify for subsidized housing programs. Such programs typically have long waiting lists, but a sudden glut of rental properties on the market might change that. Being a Section 8 landlord is often a royal pain in the ass, but the landlord knows that at least the government’s part of the rent will get paid. Might see more landlords trying to qualify for that sort of thing…
According to a couple of landlords I’ve known and even worked for no, that is not as guaranteed as you might think it is. At least not in the greater Chicago area. No guarantee it will be on time even if it is paid, but woe to you if your property taxes aren’t in on time!
So what? Large buildings are eminently repurposable. Individual homes and apartment buildings are not. That’s what we’re talking about here.
Yes. A huge one. One large enough that a major, multi-lane road runs through the ground floor instead of going around it. A building distinctive enough that it is an actual landmark.
It’s a little different than an anonymous cube of a building occupying only a fraction of a city block.
The point is it is a property with no tenants for 20 years or more.
A landlord is not getting income on the building.
Yet, somehow, they let it sit for literally decades like that.
So what you’re saying is that if you can find one case in which an owner - presumably one with so many other properties that they could afford to let one slide - didn’t go bankrupt from allowing one building not to be rented, the entire housing crisis that millions of small landlords with no other properties to balance a loss against will be facing doesn’t exist.
Are we supposed to take this argument seriously? Spoiler alert, we’re not. It’s insane reductionism.
Yeah, not easy for landlords to sell rental properties when tenants are abandoning rental homes like war refugees fleeing an advancing army.
Say it with me…
Exxxaaaaaammmmplllle
Examples are things we use in real life to illustrate a point.
If you need more: